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THE COST 
OF COMPETITION 



AN EFFORT AT THE 
UNDERSTANDING OF FAMILIAR FACTS 



BY 



SIDNEY A. REEVE 



/I 




Illustrated with Diagrams and Photograph 



NEW YORK 

McCLURE, PHILLIPS & CO. 

MCMVI 



LIBRARY of CONGRESS 
Two Copies Received 

JAN 20 1906 

£opyr!jrht Entry 
CCASS ^ XXc, No. 

/J rt 

COPY 



Y b; 



Copyright, 1906, by 

McCLURE, PHILLIPS & CO. 

Published January, IQ06 N 



TO MY COUNTRY 

IN THE APPROACHING HOUR 

OF THIS THE THIRD VITAL CRISIS OF HER HISTORY 

IN THE FAITH THAT TO THIS STANDARD 

WHEN ONCE THE INVISIBLE FOE IS DISCERNED 

THE WISE AND THE HONEST, THE BEST OF HER LIFE-BLOOD 

WILL REPAIR IN HER DEFENSE- 

THIS BOOK IS INSCRIBED 



ABRAHAM LINCOLN 

Speaking in Independence Hall, February 22, 1861: 

" I am filled with deep emotion at finding myself stand- 
ing in this place where were collected together the wis- 
dom, the patriotism, the devotion to principle, from which 
sprang the institutions under which we live. You have 
kindly suggested to me that in my hands is the task of 
restoring peace to our distracted country. 1 can say In 
return, sir, that all the political sentiments I entertain have 
been drawn, so far as I have been able to draw them, from 
the sentiments which originated in and were given to the 
world from this hall. I have never had a feeling, politi- 
cally, that did not spring from the sentiments embodied 
in the Declaration of Independence. I have often pon- 
dered over the dangers which were Incurred by the men 
who assembled here and framed and adopted that Dec- 
laration. I have pondered over the toils that were en- 
dured by the officers and soldiers of the army who achieved 
that independence. I have often enquired of myself what 
great principle or Idea It was that kept this confederacy 
so long together. It was not the mere matter of separation 
of the colonies from the motherland, but that sentiment 
in the Declaration of Independence which gave liberty 
not alone to the people of this country, but hope to all the 
world, for all future time. It was that which gave promise 
that In due time the weights would be lifted from the 
shoulders of all men, and that all should have an equal 
chance. This Is the sentiment embodied in the Declaration 
of Independence." 



CONTENTS 
PART ONE: ECONOMIC COST 



PAGE 



Introductory xiii 

I. Value , • • 3 

11. Production and Consumption i6 

III. Specialization and Coordination . . . . 35 

IV. Exchange 53 

V. Barter 69 

VI. Emulation and Competition 89 

VII. Specialization in Barter 1 1 1 

VIII. Distribution 148 

IX. The Economic Organism 195 

X. The Growth of Dissipation 231 

XL Supply and Demand 316, 



PART TWO: THE ETHICAL COST AND THE 
FUTURE 

L Prefatory 349 

II. The Ethical Nature of Barter . . . .359 

III. The Cost to the Losers 369 

IV. The Cost to the Winners 381 

V. The Cost to the Community 398 

VI. Capitalism and Labor 503 

VII. The Future: Progress without Poverty , -522 

VIII. Ethical Synthesis 575 

Epilogue 602 

vii 



LIST OF ILLUSTRATIONS 



The Washington Arch Frontispiece 

" Let us raise a Standard to which the Wise and the Honest 
can repair. The event is in the hand of God." 

FACING PAGE 

The Congressional Library 347 

" The Co-operative Distribution of Information." 

Advertising Signs 491 

" The Competitive Distribution of Information." 

Grant's Tomb and the Hudson River . . .571 
" Let us have Peace ! " 



IX 



PAGE 

lOO 

lOO 

127 

128 
136 

137 
198 

200 



LIST OF DIAGRAMS 

FIG. 

1. Emulative Efforts . . . v •« - 

2. Competitive Efforts ..... 

3. Natural Coordination ..... 

4. Coordination distorted by Capitalism 

5. Natural Coordination .... 

6. Coordination distorted by Capitalism and Land 

lordlsm ....... 

7. The Economic Organism: Section 

8. The Economic Organism: Exterior 

9. The Economic Organism: Section displaying the 

Population which absorbs the Cost of Competition 
— pure Barter and Barter-cost being distinguished 219 

10. The Fate of the Individual Producer's Productivity. 222 

11. The Comparative Growth of the Four Classes: Popu- 

lation 252 

12. The Growth of Dissipation and the Inefficiency of the 

national Economic Organism .... 254 
12a. The Advance of Invention, Science and Art, and what 

we get out of It 257 

13. The Growth of Activity of Class A proportionately 

to that of Class D 

14. The Comparative Growth of the Four Classes: In 

come 260 

15. The Comparative Growth of Productive and Com- 

petitive Activities: Aggregate and Individual . 268 

16. Comparative Percentages of Unemployed In the Four 

Classes ....... 



259 



270 



XI 



vii LIST OF DIAGRAMS 

FIG. PAGE 

17. Comparative Percentages of Unemployed in Several 

Avocations . . . . . . .271 

18. Comparative Percentages of Unemployed in several 

Avocations of Negro population . . . .271 

19. The Decline of Horizontal and the Growth of Vertical 

Competition ....... 273 

20. The Tendencies of the Times in Factory-organization 278 

21. The Growth of Homicide and Hanging: Chicago 

Tribune's Statistics ..... 308 

22. The Parallel Growth of Economic Dissipation, Crime 

and Suicide . . . . . . .311 

23. The Curve of Demand ..... 323 

24. Demand and Supply Curves, and the Market . . 329 

25. The Expansion of Production and Exchange by the 

Abolition of Barter ...... 561 



INTRODUCTORY 



A GLANCE at any one of the outbursts of clvlli- 
/\ zation which history has recorded in the past 
X ^ reveals the world as primarily occupied with, 
successful at, and characterized by some one principal line 
of effort. Egyptian monuments, Phoenician commerce, 
Greek art, Roman law and politics — each of these, to 
the student of history, means a tremendous picture of 
human activity. The spectacle of an entire people given 
over, for generation after generation, to the development 
and perfection of some task assigned to it by the force of 
destiny is inevitably a sublime one. The task is a need 
grown out of the world's evolution. The doing of it 
involves that devotion to the ideal which carries the race 
of man to its highest step toward the divine. The fruit 
of it is a solidification of an additional course of masonry 
in the edifice known as human progress, upon which may 
be reared the later superstructure as upon a foundation. 
Hidden though be the original foundations in the depths 
below, unrevealed though the Architect's final plan, the 
splendor of the whole is unquestioned. Devout admira- 
tion is the only emotion possible to him who approaches 
the study of the structure in its most temporal detail. 
Such sentiment has characterized the serious-minded of all 
ages. 

A similar glance at the age in which we live reveals its 
keynote and countersign to be the production and distri- 
bution of wealth. However essential to daily existence 

xiii 



XIV INTRODUCTORY 

may have been this occupation at all times and places, 
hitherto it has been felt, by the unconscious philosophies 
of those times, to be a necessary evil and has been rele- 
gated to individuals or to classes who, whatever their 
power for the moment, were not freely considered as of 
the best life of the community. The sword, the cassock, 
or the woolsack typified the real business of men; the nec- 
essary commissary might demand the attention of a few 
who were worthy, but it was an unfortunate few. 

Far be it from the present purpose to perpetuate this 
doctrine, to teach that in ^' these degenerate days " the 
work of feeding and clothing itself has degraded man- 
kind. Man is not falling into degradation. The higher 
things of life still remain as highly esteemed as ever. But 
to their rank has been elevated, by the slow fermentation 
of the Baconian philosophy, the world of tools. " Arma 
virumque," sang Virgil. " Tools and the man," sang 
Carlyle. Neither the honor of arms, nor priestly sanc- 
tity, nor judicial dignity, nor the magic of brush, chisel, 
or reed has fallen in estimation. But there is rising 
beside them a worldwide recognition of the fact that in 
the feeding and housing of the race there lies as high and 
brave an opportunity for the formation of enduring 
beauty as in any of the other walks of life. The world 
has given itself up to the peaceable conquest of the world. 
The bowels of the earth, the abysses of the sea, the mys- 
terious power of sunlight and lightning, the still more 
mysterious, unfathomable possibilities of the swarm of 
human beings everywhere about us, — all these must be 
subjugated by studious humility and untiring service. To 
their understanding, to their intimacy, their coordination, 
and, finally, their control, is being given the best life that 
Mother Earth can produce. To produce and distribute 
the material boons won by such study, to the myriads who 



INTRODUCTORY xv 

have sprung from her bosom in this summer of political 
liberty, is the greatest and highest need of the age. To it 
are devoted armies of loyal men and women such as the 
world has never before seen, leaders worthy the command 
of such armies, and the moral support and guidance of 
sages and priests as near to God as were Moses and the 
prophets. 

The age in which we live must go down to history as 
the Age of Supply and Demand. It is the age when the 
millions demand, in the economic sense, as they never did 
before. Their demand is not the fitful, overwrought, 
short-lived cry of the famine-stricken and the oppressed 
of the past. Famine is always local and always weak; 
oppression quickly either kills or stuns. It is the demand 
of the healthy and the free which now is heard, — deep- 
breathed, sustained and sturdy, — the exultant shout of 
the living, not the despairing shriek of the dying; and it 
arouses out of the latent an equally sturdy response. To 
its aid comes such Supply of all things worldly good as 
has never before been seen. The greatest business of 
the world is supply. Incidentally we do a little fighting, 
a little legislation, a little administration. But the fight- 
ing is for trade, the legislation is of commerce, the admin- 
istration is of industrial forces. Still more incidentally 
and fractionally we enjoy a little decorative art, a little 
music, a bit of belles-lettres. But, as a race, we are not 
in earnest about it. Our occidental civilization is as yet at 
breakfast and the morning chores, so to speak, earning 
leisure and disposition for the amenities of the later hour. 
But when this preliminary task is once done, when the 
modern world, fed with this giant Supply, shall have 
learned to choose wisely between gluttony and asceticism, 
to the end that its days shall be filled with the inspiration 
of natural life, when it shall have really turned its united 



xvi INTRODUCTORY 

best energies to the production of Beauty befitting its 
Strength, then will the hitherto unparalleled schools of 
classic art pale in the light of a sun whose mere dawn is 
now beyond the scope of accurate imagination. 

In human progress of some such sort, to a goal more 
brilliant than the imagination can depict, most educated 
people believe. But the faith Is usually rather vague as 
to immediate detailed steps, as to ways and means by 
which it may be furthered. Very often, Indeed, appears 
in public opinion, even of the better sort, a fundamental 
Inconsistency: the combination of such an expressed faith 
In that ultimate growth, of which the present moment 
must of course form a part, coupled with a complete con- 
temnatlon of all the existing social forces which are 
together constituting the moment's progress. 

It Is in the hope of somewhat clarifying both these 
fields of misunderstanding: the complexity of existing 
forces whose Intricate play constitutes the body politic as 
we see It at present, and the future lines of progress which 
may be expected to result from their natural development, 
into consistency with each other and with those natural 
longings which ever spring spontaneously within the 
human heart, that the following analysis and synthesis has 
been undertaken and Is here presented. 

To this end It Is necessary to begin at the beginning. 
Indeed, the greatest problem Is to find the beginning. 
Upon what unassailable foundation may we erect our 
philosophies of modern economic life? Of the moral 
fundaments the Christian world Is sure and In agreement: 
love, justice, charity and Industry cover well and briefly 
the ground for all moral guidance. But do they, unam- 
plified and undefined, answer the questions of the day? 



INTRODUCTORY xvii 

Here upon our hands is the social problem: of slums, 
palaces, crime and corruption. Is it, can it be, after so 
many centuries of human progress, merely the fruit of 
our having also on our hands and hearts too little of love, 
justice, charity and industry, in their abstract moral ex- 
pression? Is it true that the slums are due to laziness, 
the palaces to industry, the crime to hatred and the cor- 
ruption to innate disloyalty? Are all of the economic 
phenomena which we see about us the direct result of 
moral promptings in the individual heart? Do all such 
spontaneous promptings find possible expression in our 
social conformation? All things being taken together, is 
this probable, or even possible? 

It certainly seems not. And yet, the simple old- 
fashioned formula for the explanation of all actions: that 
they are prompted within the individual heart by impulses 
which are beyond scrutiny outside of the psychological 
laboratory, beyond explanation except by the inevitable 
iniquity of human nature and beyond control except by 
moral suasion and the direct intervention of Providence, 
— this formula once abandoned, what may properly guide 
us? Where may a Baconian philosophy of social metab- 
olism, lacking yet a perfected psychometry, find a rock 
on which to plant its feet? In a social organism, what are 
the fundamentals? What things are of most worth? 

Since the days of Saint Paul the question has been 
asked; and never has it needed answer more urgently than 
now. With formulae and statistics the suffering world is 
rightly growing impatient. We prate of economic 
science; yet have we any such? The proof of a science 
is its ability to predict. Of social phenomena what 
measure of prediction do the schools offer? Our 
astronomy predicts its happenings to the fraction of a 
second. Our engineering science will spend five years of 



xvlli INTRODUCTORY 

work and millions of dollars upon a battleship or a tunnel, 
and predict to a hair the degree of usefulness of the result. 
Our meteorological bureau even predicts the movements 
of the wanton winds, days ahead. Yet our economic 
science predicts nothing. Not a war, not a panic, not a 
strike, not even a flurry upon 'Change does It pretend to 
predict, to the confidence of even a minority of Its adher- 
ents. Not a single legislative body or policy is guided 
by Its dictum. Degrees of taxation, amounts of penalties, 
etc., etc., are decided according to statistical record. It Is 
true. But not a single broad law or fundamental prin- 
ciple of legislative policy may It lay claim to guide. Re- 
garding impending war or peace, free trade or protection, 
expansion or contraction of the currency or of territory, 
punitive repression or lenient encouragement In penology, 
and a host of similar broad questions of public policy, it 
Is either dumb or a Babel, so far as any accuracy or effec- 
tiveness Is concerned. Men of the greatest natural In- 
telligence and the best of scholastic equipment differ 
regarding them most widely, and with no hope of ulti- 
mate agreement except at the cost of experiment upon a 
national scale. Men of the most sincere patriotism seek 
its guidance In public affairs of the day only to turn away 
mystified and discouraged. 

If individual opinion should quarrel with the sweeping 
validity of such statements as the foregoing, yet it must 
at least admit their truth to a degree as characterizing the 
present social problem. The explanation, of the situation 
is that economic science as yet lacks fundamental prin- 
ciples. It is a vast mass of undigested statistics and sec- 
ondary, untested formulae. To parallel such principles 
as that of the conservation of energy in physics, the New- 
tonian laws in mechanics, the Keplerian laws In astronomy 
or the Darwinian law In organic evolution, — principles so 



INTRODUCTORY xix 

broad and so firmly founded that their validity may be 
relied upon in novel contingencies where concrete evidence 
is entirely lacking, — it has nothing to offer. It knows 
not which is beginning and which is end, which is cause 
and which is effect, what is reality and what is empty 
form. 

To replace this chaos with a complete and adequate 
social philosophy may not be the legitimate aim of any 
one book or man. But to start right in the search for it, 
to begin at the beginning and to pick out the fundamen- 
tals, — to at least pick out one of them, — ^may properly 
and profitably be undertaken now. If it be done conscien- 
tiously it cannot but lead us upwards, into a better under- 
standing of that organic whole which we call Our Coun- 
try: which is not the earth mapped out beneath our feet, 
nor the skies above, nor even the mere aggregation of 
individual Smiths and Joneses which walk between; but 
which is that method and form of union of all of these 
features into a single organism, by cementing institutions 
and laws of which we may be justly proud or must be 
justly ashamed, into a whole of which we are each of us a 
part and by which, whether we will or not, whether we be 
patriot or traitor, millionaire or pauper, we live and we 
die. This is our country. 

To this great Absorbent, Mold, and Expression of us 
all, what things are of the most worth? 



PART I 

The Economic Cost 



VALUE 

IT may be that either nature or God has in mind some 
final purpose toward which the existence of the 
human race constitutes an essential step. Since the 
dawn of human history man has been prone to believe so. 
The struggles and the pain of life put upon him a pressure 
which he can hardly bear. His strength fails him; his 
courage falters; he needs help and consolation from with- 
out. He finds It In hope, — the hope of a reward hereafter 
for the fruitless endeavor here below ; or, If the faith In a 
life after death Is wanting, there arises at least a faith 
that the brief and joyless period of work allotted to us now 
will bring permanent joy to some ultimate development of 
life other than ours which shall have attained a permanent 
state of happy existence. All forms of prayer consist, in 
one way or another, of a faith that we here below con- 
stitute a part of an Infinite Enterprise to which our en- 
deavors contribute and for which, therefore, they were 
undertaken. The faith Is as old and as natural as life 
itself. 

And yet, when observation Is made of the details of the 
way In which nature conducts her daily processes of life, 
there Is visible no evidence of any such Ultimate Purpose. 
There appears only a striving after one concrete thing: 
Perpetuation. Man's Instinctive faith may be true. His 
spontaneous moral promptings may be broader In their 
perceptions and conclusions than are his intellectual fac- 



4 THE COST OF COMPETITION 

ulties. There need be no denial of the existence of the 
ulterior goal. But if it does exist, it exists in such a way 
that a whole world of life is but one unit in its structure. 
Nature's only visible purpose is to multiply and to 
strengthen life. This life may mean a growth into ulti- 
mate permanent ascendency over all evil and suffering; it 
may mean hopeless struggle against degenerative forces 
until their irresistible march ends in death and nothing- 
ness. For the present it matters not. Taking the world 
as we see it, going only so deep as we can fathom with 
certainty, leaving all hopes and faiths to religion, there 
stands out but one fundamental fact as the base for all 
study of human life, either as a biological phenomenon 
or as the necessary starting point for all sociological dis- 
cussion : 



The Object of All Life is Life. 

To the one other fundamental factor plainly needed to 
fill out the premises — the factor of Growth — we are forced 
to accord a secondary position, to place it in the conclusions, 
so far as immediate argument is concerned, rather than in 
the premises. The primary force which promotes it we 
have as yet been unable to define. The goal toward which 
it is driving us is as yet announced only in the creeds of 
religious faith, and there often unformulated. But what- 
ever may prove to be the truth as to either, certain it is 
that they remain as corollaries to the first proposition. 
Growth cannot take place unless perpetuation of the pres- 
ent be first attained. Progress Implies primarily that 
provision has first been made to forefend retreat. Re- 
production of the existing, each after Its own kind, Is the 



VALUE 5 

first office of life, the first law of God, the first great 
human fact. 

Also growth in numbers necessarily precedes, as a basic 
foundation for, growth in kind or quality. 

The truth of these statements is most palpable in the 

»ver forms of life. Here it is incontrovertible. It is a 
prime characteristic of all the lower orders of existence 
that there is very plainly no other object in view except 
reproduction. Every step in the development of insect 
or crustacean is planned to this end; and while it can be 
said that there are other imaginable paths of approach to 
the final result than those actually followed, that many of 
the stages of development of the individual appear to be 
irrelevant and to exist for other purposes, such as food- 
supply to other forms of life or for the sake of mere 
beauty, yet it can be replied with equal force that this too, 
in the few cases which have not yet been connected with 
reproduction, is life carried on for the sake of life. The 
consummate fact, in most of these lower levels, is that the 
process of procreation ends the individual life. If nature 
has any use for the individual insect other than the pro- 
duction of more insects, those duties are not performed 
after procreation is accomplished. That act ends activity. 
All duties performed before that culmination, on the other 
hand, must be regarded as accessory to what comes after. 

For instance, the storage of pollen by bees is very plainly 
an act performed for the sustenance of offspring. But 
nearly all bees store much more pollen than the young 
bees can consume. Viewed as a provision against loss by 
robbery, storm, etc., this surplus stands purely as a safe- 
guard against possible failure of the next generation of 
bees, under average conditions of interference from with- 
out. But viewed in its brqadest sense, this surplus is a 



6 THE COST OF COMPETITION 

provision for the life^ if not of bees, then of bears 
and men. Even at so low an order of life as the insect 
is seen herein the elementary effort of one form of life to 
provide for another. The fact that it is done uncon- 
sciously and unintentionally does not affect the result. 

As the development of life in the higher and higher 
forms is observed, it becomes plain that this parallel sur- 
plus provision for other life than the immediate off- 
spring becomes more and more prominent. In the first 
place, the care for the direct offspring has become more 
complex. Gestation has succeeded egg-laying. Infancy 
under care and tutelage has replaced larval development. 
The amount of care bestowed upon the young has tremen- 
dously increased, and still grows with every advance In 
height and complexity of existence. But the proportion 
of life-effort preceding completed reproduction of the 
adult offspring has markedly decreased. In the insect 
all of life commonly precedes the mere appearance of the 
succeeding generation. There is no lap of generation 
over generation. In man not more than a third of life is 
past before reproduction is undertaken, and not more than 
two-thirds before it Is completed. The generations lap 
over each other until sometimes as many as three succeed- 
ing adults exist at the same time, with the fourth genera- 
tion in well-developed infancy. 

The remainder of the life-effort of these higher forms 
of life, after reproduction is cared for, very plainly goes 
to other ends than the care of immediate offspring. Even 
in the brutes this is' apparent. In embryo. Some effort is 
spent in organization and in the costly struggle by which 
leadership is determined. Food-supplies for other ani- 
mals are accumulated, as by the deer for the wolf; vege- 
table growth is fostered or regulated, as by the earthworm 
or the browsing herblvora or the pollen-carrying honey- 



VALUE 7 

gatherers ; servitude is even accomplished, as in the aphides 
to the ants. In the last development of animal life it 
becomes domesticated and subservient to man. As beast 
of burden and as provision of food and clothing, the beasts 
alone made man first possible. 

In human life itself this parallel provision for other 
forms of life than that of the immediate offspring reaches 
its highest and widest development. Whether a man un- 
selfishly wills it or not, all of his life-effort, after his chil- 
dren are cared for, goes to support others. They will 
fatten upon him and upon his work, though he be a miser 
or a murderer. He contributes to industry, to commerce, 
to politics, or to art all his life long; or if he succeeds in 
failing to contribute even a mite to these, medical science 
is at the last the richer for his life, his pain and his death. 
If he even be no more than one unit in a column of 
statistiics, or a mere pestilential corpse whose presence 
forces mankind to consider pestilence for a moment, what 
little he accumulated or inherited of life has gone to enrich 
or to fortify the future race. Nature wastes nothing. In 
no department of nature is this so true as in human life. 

All civilization is made up of this fact. Civilization, 
indeed, is nothing more than this fact become a conscious 
one. The great majority of men recognize and strive to 
meet their duty to others. Military patriotism is ele- 
mental. The first Society arose upon its back. Man 
lived and died for his country almost before he had a 
country. Later came civic patriotism, art, science and in- 
vention. With their spread have come peace, freedom 
and enlightenment. With them, too, have come hospi- 
tals, asylums, refuges and reforms. Not all the evil love 
of all the good gold in the world has been able to lure 
man from his first devotion to the conservation of life; 
he has reserved only a secondary, minor homage for indus- 



8 THE COST OF COMPETITION 

try and commerce. At every turn of civilized existence 
life is held sacred, inviolate and invaluable. No expense 
is held too great to warrant the extension of care to the 
worst mutilated body, of justice to the meanest criminal. 
The highest devotion known to mankind is daily visible 
in medicine and in nursing; the broadest patriotism is in- 
corporated in our common judicial system. Of all the 
institutions of man, the gallows and the slums alone stand 
in contradiction of this universal sacredness of life. 

Life, then, is sacred. It is the sole object of all life, 
of all effort, of all inspiration. For its furtherance, and 
for that alone, exist not only the family, the school and 
the factory, but all science, all art and all religion. To 
discuss its " worth," even to raise the question : *' Is life 
worth living? " with hope of profitable answer, with other 
object than merely to kill time, — life for the moment 
apparently being worth nothing better, — is a mere lack of 
life, is partial death or temporary insanity. For a men- 
suration of its value, in any external unit, is as impossible, 
as incomprehensible to the human intellect, as is the defini- 
tion of space or time. They are indefinables all. 

Nevertheless, man occupies and makes use of his own 
little atoms among the indefinables, or even among the 
infinities. He employs space and time, and life itself, 
for his purposes. He must have ideas of quantity in con- 
nection with them all. He must have units of measure- 
ment. But he needs to use rational, comparative units: 
of time for measuring tim'e, of space for measuring space, 
of life for measuring life. 

This measurement of Life man actually essays. As the 
flotsam of life is tossed before him for consideration, as 
love, riches or institutions, as knowledge, opportunity or 
inspiration, are held up for his comparative estimation, the 



VALUE 9 

decision, speaking broadly, always finally turns upon the 
question : " How much of human life will it support or 
elevate?" Temporarily or locally fancy or ignorance 
may warp the judgment, and this rightful arbiter of the 
issue be forgotten; but sooner or later nature reduces the 
question to its lowest terms: "The greatest good of the 
greatest number." That which brings the opportunity of 
life to the greatest number, or in the greatest purity, or 
in the greatest complexity of composition, inevitably sur- 
vives. The fruitless fancy, the vain ambition, the selfish 
greed, the malevolent craze, succumbs. Art may flourish, 
empire may widen, knowledge may take root and grow, 
culture and refinement may be of the most extreme, aristoc- 
racy may flaunt its heraldic emblems and prune its ancient 
genealogical trees; yet if the solid promise of unlimited 
opportunity for future billions be not incorporated therein 
nature sets upon it her stamp of disapproval. It withers 
and dies, is buried and lost. In its place sprouts the seed- 
ling of a new life, vigorous and unlovely, but true to its 
duty toward the unborn hosts. It thrives and prospers. 
Feeding upo-n the carcass of the lost, it attains the prom- 
ise of which the other failed. Life is multiplied and 
widened and elevated. Life, the object of life, has been 
accomplished. 

This estimation of life in terms of life is a true valu- 
ation. It is the only possible true one. In the attempt 
to gain any comprehension of the idea of " worth " or 
" value " of life, it alone brings satisfaction. It alone is 
in no danger of the reductio ad absurdam, as of an at- 
tempted equation between minutes and inches. 

Yet this satisfaction referred to must keep plainly in 
view the narrow limitation of the valuation. It is purely a 
comparative one. It measures life only in terms of 



lo THE COST OF COMPETITION 

life. For instance, a clam values mud and tides and art 
and music solely as they are conducive to clam life. It 
would be a very unnatural, crazy or morbid clam which 
did not. But a man must value mud and tides and music 
and art solely as they are conducive to human life. There- 
fore, the two valuations must differ hopelessly. 

Further, there must be great difference in the value of 
a thing for human life between one time and another. 
The land, the utensil, the institution, the occupation which 
at one time may have had a very high value in the support 
of human life, at another must have a very different one. 
It may have afterwards lost all of its potentialities for 
succoring life. It may have become even destructive of 
life, and therefore come to possess a negative value: a 
thing to be cut out and destroyed, even at cost. Plainly, 
all hope of permanency of value must be abandoned. 

Nevertheless, full emphasis must be laid upon the fact 
that the value exists. It is a natural, concrete fact. Any 
imaginable Thing possesses a certain latent ability to 
foster human life. This ability may be re^cognized and 
employed; it may be Ignored and wasted. If the ignor- 
ance and waste apply to the entire race, It must be re- 
garded as inevitable at that stage of human growth, and 
that the thing in question possesses no immediate poten- 
tiality for that particular sort of life. But if the waste 
is only on the part of an individual, or of a fraction of the 
race, there then arises a question concerning the valuation 
of the thing under discussion by the various individuals con- 
cerned, and this valuation Is a thing quite apart from the 
natural value of the object. 

For instance, the petroleum-deposits of North America 
were known to the aborigines, but were employed not at 
all, or only as medicinal agents. For the support of 
Indian life petroleum possessed practically no value, while 



VALUE II 

bison-meat possessed much. Now that the country is 
populated by civilized whites the petroleum possesses 
great value and the bison none. Yet to the few remain- 
ing Indians the petroleum is still almost valueless. Orig- 
inally, the value of the petroleum was nearly zero and 
the savage's valuation of it was correct. To-day the 
value of petroleum is very great and the Indian's valuation 
of it, which has remained substantially unchanged, is quite 
erroneous. 

In the following pages, therefore, the following defini- 
tions and distinctions will be applied to the terms *' value " 
and " valuation.'' 

Value IS the potentiality of a thing for the support of 
human life and growth. In the measurement of this 
potentiality the average existing stage of development of 
the race, and hence its possibilities for utilizing the thing, 
must be considered; but this point once defined, — and it 
may or may not be included as a natural fact of environ- 
ment, — it may be asserted that value is a natural attribute 
of a thing, inalienable and unalterable by human will ex- 
cept as either the thing itself or the knowledge of the 
entire community regarding Its mode of consumption is 
altered as a means thereto. 

In this sense, value is nearly always made up of two 
factors: the original and the contributed. The original 
consists of its chemical and physical properties, its pleni- 
tude of distribution, its geographical or topographical 
accessibility, etc. The contributed is always capable of 
inclusion under the term scientific or technical knowledge. 
Thus, nearly all of the substances which are now relied 
upon as the raw material of modern industry were known 
to man before their possibilities were appreciated and util- 
ized. Coal was known and used before the steam-engine 



12 THE COST OF COMPETITION 

gave to it Its present fundamental Importance in the sus- 
tenance of our civilization. Part of its value lies in the 
fact of its being coal; part has been added by man In the 
invention of the steam-engine. Its thus compounded 
value has been further supplemented by the invention of 
coal-gas, and again by the appearance of the gas-engine, 
of aniline dyes and of a thousand other additions to the 
technical attainments in industry which rest primarily upon 
our coal-supplies. There is scarcely a step in advance in 
modern methods of production, in any line of invention, 
which does not enhance the value of coal. 

If it be preferred, the distinction may be kept in mind 
that only the original value of the coal should be assigned 
to it, the increments due to steam-engine, coal-gas, etc., 
being conserved to the credit of those implements them- 
selves. Neither plan will be found to be ultimately cor- 
rect; the implements would be entirely worthless without 
any coal; the coal would be almost worthless without the 
implements. But the distinction between the two plans 
is quite irrelevant to our further argument and is men- 
tioned here merely to prevent misunderstanding and to 
allay fear that it might have been overlooked in the 
analysis. The point is, and It will be made clearer and 
more emphatic in later elaborations, that man, by his skill 
and industry, can affect existing values or produce new 
values; but it Is also to be emphasized that he does it 
solely by either discovery or Invention, by the overcoming 
of purely natural obstacles, to the increase of Human 
Knowledge. 

Because It is so widely accepted as axiomatic, by the 
average man of affairs of the day, however, that the Ideas 
of value and of price are Identical, especial warning Is 
also to be Inserted here to the effect that the understand- 
ing of the reader should be kept neutral as to the defini- 



VALUE 13 

tion of price until the latter is reached In the analysis. 
So far Is It from the truth that value and price are synony- 
mous that It may be stated, as a general coincidence, that 
nearly all of the factors just stated as Increasingly contrib- 
utory to the value of a commodity actually result In a 
decrease In Its price. The invention of the steam-engine, 
for instance, which has added enormously to the value of 
coal, has very markedly decreased the price of coal. 
There is no fixed inverse relation between the two ; but, on 
the other hand, there is no direct one either. 

Valuation, quite in contrast with Value, Is the human 
estimation of the value of a thing, on the part of an in- 
dividual, of a fraction of the community or of the entire 
race. It must always be regarded as a human and faulty 
approximation to the natural reality — Value. It Is in- 
tensity of desire, although not always visibly expressed. 
In the face of proposed exchange. It is a function of the 
mental and psychic make-up of the individuals concerned, 
and differs in each. In most of our use of the term later 
in these pages It will be understood to signify the average 
valuation amongst a certain number or class of individ- 
uals. The context will reveal In each case which Is 
meant: individual Or average valuation. 

Valuation is easily alterable by man, without any altera- 
tion either of the thing itself or of the available fund of 
the world's knowledge regarding Its consumption, through 
the medium of fashion, education, persuasion, duress, 
emergency, etc. All that is needed, in order to affect 
valuation, is to influence the mental attitude of the 
individual, or of a number of individuals, toward the 
thing in question. 

Thus, large diamonds (to exclude the unattractive little 
ones utilized in the arts) possess very little real value. It 



14 THE COST OF COMPETITION 

is doubtful if they in any way aid in the support of life or 
growth, even in a minor degree.^ But their valuation by 
certain individuals and classes is very high. Pure water 
and fresh air, on the other hand, are of the very highest 
value ; yet until recently they had a very low valuation, as 
compared with diamonds. Even to-day impure air and 
water are accepted without complaint by ladies who would 
feel it a hardship to be compelled to appear in evening 
dress without their diamonds. 

Diamonds will serve as an illustration, too, of how the 
valuation of a thing depends upon personal forces quite 
differently from value. The value of diamonds depends 
upon our knowledge as to their usefulness in the arts, at 
present confined to minor grinding and drilling processes. 
Future discovery may unearth much wider fields of pro- 
ductive usefulness for the diamond than these, and so 
enhance its value. In this sense, and this only, its value 
is variable with time and effort. But its valuation is arti- 
ficially variable in many other ways. The present high 
valuation of the diamond does not depend upon ignorance 
of the fact that it is good only for grinding. Many 
people who know that fact, mentally if not spiritually, 
still prize decorative diamonds highly. It depends upon 
personal vanity, in the first place, upon fashion in the 
second, and upon the possibility of acquiring wealth by 
means of mere personal attractiveness in the third. 
Alteration in either may take place at any time, in an 
individual or in an entire community, by artificial influ- 
ence, quite independently of any alteration in human 
knowledge as to the productive usefulness of diamonds. 

1 This does not necessarily imply that decorative art, even as applied to 
personal adornment, is useless for maintaining life, in quality as well as in 
quantity. It merely raises the question, or assumes it negatively, for the 
purposes of illustration, as to whether or not the diamond is really decora- 
tive, as usually worn, 



VALUE 15 

There is no fixed or natural relation between the value 
and the valuation of a thing. With the great majority 
of natural objects now undergoing study the full value is 
not yet perceived; valuation is far below latent value. 
The efficiency of valuation, so to speak, is low. It may, 
indeed, in this sense, be regarded as necessarily less than 
unity. But with many other objects, such as diamonds, 
alcoholic drinks, firearms and hereditary titles, the present 
valuation far exceeds the value. With these the explana- 
tion lies in the very low value of the things themselves and 
in the irrationality of a fashion which keeps them in 
favor. But, as will be developed later, quite other forces 
than these may lead to an excess of valuation over value. 



II 

PRODUCTION AND CONSUMPTION 

IT has been observed that the object of all life and 
activity is the support and furtherance of life. Com- 
plete discussion of the ways in which this most com- 
plex process is carried out In human affairs would carry 
the argument into every detail of the arts and crafts, into 
manufacture, commerce, legislation, literature, science and 
decorative art. To properly limit and direct the present 
inquiry within profitable bounds It Is sufficient to define it 
as concerning primarily the relations between the men and 
the things concerned only in that sort of life-support where 
the Value is embodied In an appreciable, material or mer- 
chantable thing. 

The process of the expenditure of human effort in the 
creation of Value ready for the support of further life is 
known as production. The process of the expenditure of 
Value in the production of further supplies of human 
energy Is known as consumption. The two together, each 
balancing the other, constitute that energetic cycle which Is 
known as economic social life. 

The form In which these processes take place to-day, 
however, In spite of their simplicity in principle. Is far too 
complex to admit of their being passed by with the brief 
definition just accorded to them. An understanding of 
their exact natures and limits will require considerable dis- 
cussion; and in this discussion, since all of these matters 
have long been under comment In a loose and popular 
fashion, many words familiar to every reader will have 
to be redefined. Nor will the definitions, albeit exact, 

i6 



PRODUCTION AND CONSUMPTION 17 

which have already been assigned to these words by pre- 
vious economic writers always be found to be satisfactory 
for our present purpose. The definitions here chosen for 
them may seem to be arbitrary ; but even so, they must be 
carefully adhered to If the naturally discouraging Intri- 
cacy of such a topic as economics Is not to be aggravated 
by the additional artificial difficulty of a misunderstanding 
of meaning. 

At the start, these definitions will be listed somewhat 
succinctly, their significance In combination being brought 
out more gradually only by further development. When 
all is finished It will be found that the limitation just 
assigned to the argument, viz. : that it Is to concern only 
the production and consumption of material, merchantable 
forms of Value, Is a meaningless one. It will appear that 
the economic phenomena, the principles of social action 
and their biological reaction upon the individual life which 
have been developed in connection with material commod- 
ities hold just as true when the activity concerns the Im- 
material, non-merchantable forms of Value germane to 
the fields of science, education, legislation and art, includ- 
ing even religious inspiration. Indeed, it is one of the 
reasons why economic science stands to-day as so puerile 
and ineffective that it has ever been emasculated at the 
outset by the imposition of this unnecessary limitation. 
Nevertheless, since the material forms of Value are the 
more tangible, and so the better for the purposes of illus- 
tration, and because they employ the greater portion of 
the nation's activity at present, the traditional limitation 
will be retained, in opening the argument at least. 
Land. The first prerequisite for the creation of Value, 
for the support of human life, is access to the natural 
stores of true raw material. To these stores, whether 
found in the field, the forest, the mine, the rivers or 



i8 THE COST OF COMPETITION 

the sea, is given, in economic parlance, the name of 
" land." Whichever of these it may be, the word is ever 
to be understood as referring only to the natural locality, 
or site, and never to any artificial aids to the development 
of its resources which may have been added to it by human 
labor. 

The more complete definition of the term land, together 
with a discussion of the nature of rent, will be found in 
Chapter VII. For the present it is sufficient to point out 
that the essential importance of land as the first means 
to the support of human life has led to its being, since 
history began, the prime object of contention between 
man and man. Not even religion or love, the two great- 
est epics of the race, have been able to lay claim to so 
great an expenditure of human life and strength, or have 
been responsible for so great a fund of human cruelty 
and suffering, as has the struggle for access to and control 
of the most favorable portions of nature's bounty in the 
form of land. 

Tools. With primitive man the methods of the pro- 
duction of wealth were of the simplest sort. Vegetable 
food was gathered and prey captured by the diligent use 
of the naked hands. The first departure from this primi- 
tive simplicity lay in the invention and use of tools. 
Decided advantage was found in the use of a cudgel to 
emphasize the force of a blow, or of sharp-edged shells 
to aid in cutting and tearing. Herewith arises the first 
distinction between the different sorts of things external 
to man, in his efforts at the production of wealth, between 
raw material and capital. 

Raw Material is the material substance which is pre- 
essential to and which is passed through the hands of 
labor in the latter's efforts at its transformation into some- 



PRODUCTION AND CONSUMPTION 19 

thing of greater value for the support of life. In the 
most primitive industry it is difficult to distinguish 
between raw material and land. In lumbering, for in- 
stance, the forest-trees, grown without cultivation, stand 
as a purely natural resource; and in selling timber-lands 
the character of the trees standing thereon is usually much 
more of a consideration than is site or soil. When the hus- 
bandry applies to a vegetable form of wealth one degree 
more complex, as in the harvesting of grain, for instance, 
where the growth has had to be fostered by cultivation, 
it is only the soil itself which is the near approach to raw 
material ; the grain itself must be regarded as the fruit of 
labor expended in cultivation. 

In modern industry this complexity has grown from an 
incidental into an all-important feature. In considering 
any fractional portion of the labor of the country, raw 
material no longer means what it did when man turned 
universally and without restraint to primitive nature, to 
the primeval forest or the uncultivated plain, for supplies. 
Now almost all raw material, as the term applies to a 
single factory, or even to an entire industry, means the 
product of previous labor, placed in the hands in ques- 
tion for the addition to it of still further increment in 
value. Such raw material is merely the result of labor 
which has been exerted at some previous time, crystallized 
now into inanimate embodiment and capable of trans- 
portation and exchange. 

It is the primary purpose of labor, in its handling of 
raw material, to thus treat as much of it as possible, with 
as little loss in quantity and as great a gain in value as 
possible. The final rejection of the finished article to or 
toward the consumer is as complete as possible. Indeed, 
the labor cannot be considered as being productive labor 
at all, and therefore to be included in economic discussion, 



20 THE COST OF COMPETITION 

unless it does Increase the value of the raw material and 
unless It does reject all of this Increased value toward the 
consumer. In both these respects will be found the char- 
acteristics of raw material which distinguish it from the 
tools or capital also employed by the labor which treats 
it, viz. : that the capital Is never altered in value and is 
not rejected toward the consumer, but is retained intact 
in the users' hands. 

It is to be noted that there are some commodities con- 
sumed by factories, such as coal, oil, etc., commonly known 
as " current supplies," which must be included as properly 
constituting raw material, although they disappear dur- 
ing the progress of the work and do not reappear as a 
part, in a visible, concrete sense, at least, of the finished 
product. Invisibly, however, they are incorporated into 
the work and Into the result. 

Capital Is the assemblage of tools, large and small, 
the buildings which shelter them and the work, and the 
permanent power-plant which drives the machinery, which 
Is requisite for the prosecution of modern industry. The 
term Includes all which labor employs, but does not con- 
sume or transform, which labor can produce. This 
definition excludes raw material, which Is, In one sense, 
consumed; more properly, it Is transformed and passed 
on. It includes all improvements on land, but excludes 
unimproved land, or site. 

Depreciation. It Is the characteristic of capital, which 
distinguishes it from raw material, that labor aims not 
at its absorption and transformation into finished prod- 
uct, but at Its preservation unchanged. This last always 
proves to be immediately impossible. All capital suffers 
depreciation, or loss In value, by use or by mere owner- 
ship. Some of this loss is a function of time only, due 



PRODUCTION AND CONSUMPTION 21 

to decay, the cost of protection from fire, robbery, etc.; 
some of it, such as wear and tear, occurs only as an inci- 
dent to Its use. Both forms of depreciation must be made 
good by labor as a part of its daily task in the production 
of wealth. Whether the process be actually carried out 
or not does not affect the result. For instance, if the 
labor in a given factory produces goods to the valuation 
of $1000 each day, and during the same day the deprecia- 
tion of the capital employed amounts to $100, the daily 
production of value really amounts to only $900. If the 
capital and the output be owned by the same parties, the 
depreciation may apparently be neglected and the goods 
sold for $1000; but the net increase of value to the com- 
munity is only $900, nevertheless, and cannot be disguised 
into anything more. 

Depreciation is that portion of the labor making use 
of capital which is exerted in the maintenance of that 
capital at constancy of value; It is an inevitable incident 
to the continuous prosecution of productive, tool-using 
labor. Although the emendations to the capital often 
enter the factory apparently as portions of current sup- 
plies, or even as of raw material, or are merely charged 
up on the books without concrete Incorporation into the 
actual property, — or although it may be impossible to 
maintain the property In constancy of value, owing to its 
becoming antiquated, — depreciation belongs neither to 
raw material, nor to capital, nor to interest; nor is it 
chargeable against any other account, than labor. It is 
labor's net cost incurred in using the capital, in preference 
to working without It. The real gain to labor due to its 
use is found by deducting from the apparent gain the 
depreciation.^ 

1 Since raw material is equally chargeable against labor before any net 
production of value may be considered to have taken place, and since 



22 THE COST OF COMPETITION 

Wealth. The purpose of the activity of the industrial 
and commercial organization of the country is the pro- 
duction of wealth. It is commonly supposed that this 
production of wealth consists merely of the activity of 
labor (using that term in its broadest sense) engaged in 
operation upon raw material with the aid of land and 
tools. If the situation be examined more critically, how- 
ever, it will develop that it cannot be so tersely described, 
with accuracy, even when assigning to the words their 
broadest significance. 

The word wealth is commonly defined as that which 
has valuation in exchange, and that definition will be 
adhered to here. Wealth is the concrete of which valua- 
tion is the abstract. But we have already drawn, as a 
fundamental idea, a wide distinction between Valuation 
and Value. Diamonds possess a high valuation, and con- 
stitute wealth of the most unquestionable sort; but they 
possess almost no value. A pure and ample water-supply, 
on the other hand, is of the very highest value for the 
support of human life upon any appreciable scale; yet the 
degree to which such a natural resource possesses valua- 
tion and constitutes wealth is, while existent, insignifi- 
cantly out of proportion to the degree to which it pos- 
sesses value. The water-supply is practically incapable of 
exchange, and is generally deemed not a fit basis for the 
development of pecuniary profit. Hence it falls mainly 
outside of our definition of wealth. 

Yet, In the selection of factors of fundamental Impor- 
tance, It was Value, and not Valuation, which appeared 
as the sole firm basis for the raising of either an economic 
philosophy or a nation. Therefore, since it does stand, 

both raw material (except in the most primitive cases) and depreciation 
actually made good are both crystallized forms of labor, depreciation will 
hereafter sometimes be classified as one form of raw material. But it is 
not really so, with perfect accuracy. 



PRODUCTION AND CONSUMPTION 23 

as a present fact, that the universally accepted idea of the 
economic world regards its duty solely as the creation of 
wealth, and since it now appears that wealth and value 
are fundamentally distinct ideas, it seems all-important to 
investigate carefully the difference between the two. The 
natural program for this investigation is first to examine 
the process of the production of Value, and afterwards 
to turn our attention to the creation of Wealth, or Valua- 
tion. It will aid the clearness of this task if we reserve 
the familiar word " production " solely for the activity 
aimed at the development of Value, choosing other terms, 
in due time, to indicate activities looking toward the 
acquisition of wealth and therefore to be contrasted with 
what is here to be called production. 



Production 

Production. In the production of wealth by the 
addition of value to raw material, labor undertakes two 
sorts of processes, viz. : transformation and transportation. 

Transformration is the increase in the value of the 
raw material, by the alteration of its form: by its sorting, 
cleansing, grinding, burning, smelting, baking, molding, 
machining, polishing, painting, packing, etc., so that it 
possesses a greater potentiality for the support of human 
life than it' did before. 

Transportation is the addition of value to a com- 
modity by the alteration of its locality, without change of 
form. (The definition is purposely worded to exclude 
any alteration in the locality of a commodity which does 
not enhance its value, that is, which does not increase its 



24 rHK COST OF COMPKTITION 

potentiality for the support of human life. Effort of this 
last sort will receive its proper classification at a later 
point in the analysis.) 

Although this definition is of the simplest form and 
although the industry of transportation is one of the most 
familiar to all observers, it is worth while to arrest atten- 
tion for a moment upon the magnitude and importance 
of this branch of production. The underlying idea is 
very simple. Iu)r instance, a bushel of corn grown in the 
center of an agricultural district, where there is a surfeit 
of corn, possesses very little value, ft frequently happens 
that its sole value is for use as fuel. In such case it is 
because all the corn which could be eaten, in that locality, 
has been eaten ; as food it has done all possible to support 
life; yet there remains a surplus in surfeit. If this sur- 
plus be transported to a mining or a manufacturing dis- 
trict, where there is a surfeit of mechanical labor but a 
dearth of natural food-supplies, without any alteration in 
its form or nature whatever, it becomes immediately of 
great potentiality for the support of additional life. 

This is the sole natural reason for the world's present 
enormous investment and current expenditure in steam- 
ships, railroads, wagons and horses, and their supplies, 
it is the one largest single industry of the world: for a 
large portion of the fixed factories of the land are really 
only accessory portions of our transportation-system, 
making steel ship-plates or railway-rails, marine or loco- 
motive steam-engines, upholstery for cars and cabins, 
navigating-instruments and tables, horseshoes, coal, sails 
and cordage, signals, what not. Add to this the wages 
of the millions of sailors, railroad-men and teamsters 
employed and the sum total is appalling. This entire 
current expense to the world must be made up and over- 
balanced by the gain in value due to mere change in the 



PRODUCTION AND CONSUMPTION 25 

locality of the commodities handled, or It would not con- 
tinue to exist. 

Labor, In Its efforts at the transformation and trans- 
portation of material commodities, cannot work under 
the guidance of Its own intelligence alone. No amount 
of education may ever hope to effect that. The laborer 
may be most skilled In his work, but his task covers only 
a small portion of the total purpose to be accomplished. 
If he gives proper attention to his work he cannot also 
have a proper survey of Its relations to the efforts of 
others. He fails to develop the best judgment as to the 
most profitable kind and degree of effort to exert. He 
lacks proper perspective in viewing the relations between 
his own pet task and the needs of the rest of the 
community. 

Someone must be reserved from the duty of prosecut- 
ing the actual details of the work in order that he may 
retire to a little distance, obtain this needed perspective 
and cultivate broad-mindedness and judgment. He needs 
to have accurate observation of the peculiarities of the 
individual workmen. He must not fail In skillful appre- 
ciation of the external environment to the work. It will 
not do to let goods be produced which the public do not 
need or want. Fo.resight is also w.anted as to future 
alterations In this environment: to va*riations in supplies 
of raw material, to fluctuations In demand from the pur- 
chasing public. Such is the ofl^ce of 

Superintendence. To direct, coordinate and control 
the efforts of labor, in order to bring It Into a maxi- 
mum efficiency of subdivision of work and of agreement be- 
tween Inside possibilities and outside conditions and needs. 
The first and most perfect development of superintend- 
ence arose in connection with military operations, which 



26 THE COST OF COMPETITION 

must be considered as one department of productive labor, 
so important formerly to community-life was common 
self-defense. The reduction of the community of military 
laborers to a maximum of efficiency, in so far as discipline 
and direction can do it, has never been surpassed, in 
degree or perfection, in any other line of work. All 
more modern forms of superintendence are but the off- 
spring of this more or less remote ancestor. 

Accountance. A department of labor which may or 
may not be reckoned as belonging to superintendence 
is accountance. Whether it is to be so classed or not 
makes very little difference to the true understanding of 
the economic system. On the other hand, it is quite essen- 
tial to such an understanding that clear distinction be 
drawn between two sorts of accountance, one of which is 
properly to be classed as a sort of productive labor and 
the other as something quite different. The first sort is 
that which accounts for the things produced: the shop- 
order book, the stock-list and the shop-cost accounts, etc. 
Definition of the other sort of accountance will be 
deferred until later in the analysis. 

Design. A modified form of the direction or super- 
intendence of labor is that of design. When it borders 
upon the artistic it of course calls for a very different 
species of ability from that best adapted for true superin- 
tendence. Yet the need for it lies very closely in the same 
class, and in the following pages no further distinction 
needs to be drawn between the two. Design includes the 
work of the artist, the engineer, the chemist, the author, 
the educator and the drafter of proposed laws, as well as 
the lower orders of current conventional design. 

Invention. When the design lies in a field not pre- 
viously trodden it is called invention. The questions 



PRODUCTION AND CONSUMPTION 27 

involved In the special value to be assigned to novelty of 
invention, to secure which to the inventor is the object of 
the patent-offices of the world, will not be entered upon 
between these covers. It is an important field, but it is 
irrelevant to our main purpose. Excluding these con- 
siderations, then, invention reduces to merely one depart- 
ment of design, that is, to one sort of superintendence. 

Such is the complete skeleton of our system of produc- 
tion. There has been as yet no discussion of Methods 
with which to clothe the skeleton with flesh and form, but 
otherwise the structure Is complete. The original raw 
material from the earth undergoes transformation at the 
hands of labor. Not all of the transformation being accom- 
plished in one locality, nor any of it in the place of con- 
sumption, transportation is added: at first from hand to 
hand, then from factory to factory, finally to the con- 
sumer. In bath processes labor makes use of capital, or 
tools, the current depreciation of which It must make good 
as it goes. In both processes It receives direction from 
superintendents, designers and inventors. These things 
together ^ land at the door of the Consumer what he 
absorbs in the maintenance of his existence. From the 
original mine or field or forest to the finished package 
laid in the hands of him who permanently destroys it, 
by its absorption in the support of human life and not by 
its transformation into other things, is the field of Pro- 
duction. It is most important that this field of activity 
be not confused with any other class of human-effort here- 
inafter to be introduced Into this scheme of analysis. 
Therefore the following schedule is presented, to display 
clearly its several parts in their proper relation to each 
other and to define them accurately In their segregation 
from all other industrial or commercial activities: 



28 THE COST OF COMPETITION 

PRODUCTION = the Transformation plus the 
Transportation of Raw Material, viz.: 

Stock and 

Incidental Current Sup^ 
plies; 

From the Natural Source, 

viz. : The Field, 

The Forest, 
The Mine or 
The Sea; 

By Labor, viz. : Productive Labor proper, 

Unskilled and Skilled; 
Labor devoted to over- 
coming Depreciation, 
and 
Superintendence^ includ- 
ing: 

Organization and 
direction of the 
actual effort, 
Design, and 
Invention ; 

With the use of Capital, 

viz. : Improvements on Land, 

Buildings and all 
Tools, including both 
Hand-Tools and Ma- 
chinery ; 

To its Natural Destination, viz. : The Ultimate 
Consumer. 



PRODUCTION AND CONSUMPTION 29 

Consumption 

If a closed community be Imagined, that is, one carry- 
ing on no trade with other outside communities, the pro- 
ducers would all be consumers also, each individual con- 
suming what some other Individual produced. Such a 
body politic would maintain Itself In perfectly continuous 
operation, without any aid from any accessory process, 
activity, organism or source of energy whatever, with- 
out or within, so long as the supplies of original raw 
material: the mines, the fields and the forests, held out. 
Such a self-supporting body politic. In essential. Is each 
state. Foreign trade may come as an addition to these 
activities, broadening, enriching and elevating the 
national life above what it otherwise would be. Other 
internal activities may be added to the purely materialistic 
ones just listed. These may be good and wholesome, and 
if so they may be classed merely as another sort of pro- 
ductive labor; the terms production and consumption may 
then be expanded to Include the less tangible forms of 
life-support supplied by religious, artistic or scientific 
inspiration. Or they may be evil and destructive, and 
therefore never to be classed as productive. But what- 
ever addlton of the latter sort may be necessary In order 
to completely include all social activities within our 
category, it is plain that the former classification Includes 
and exhibits all which may In any wise be regarded as the 
basis of the community-life. At the bottom, as its foun- 
dation, the state must be what has just been defined. 
However momentary exaltation or dementia may thrust 
up some short-lived peak of attainment above the mean 
level of life-support, the stable surface of natural life 
may never, under the law of the conservation of energy, 
hope to rise permanently and in equilibrium above the 



30 THE COST OF COMPETITION 

level to which it is nurtured by its own current Produc- 
tion of Value, as just defined. Lower than this it may be, 
ft is true. Moral obliquity on the part of the individual, 
false religion, false law, false public opinion or a racial 
unfitness to environment on the part of the community, 
may slur the natural result to be expected from the metab- 
olism of this current supply of Value. The efficiency of 
transformation of economic into biological energy may 
be, and no doubt usually is, less than unity. But no 
imaginable force may ever make it greater. The sole 
measure not only of the economic but also of the political 
and ethical strength and independence of a country is the 
extent and the skill with which the aggregate process out- 
lined above is carried on. The nobility and purity of its 
life depends upon the degree to which all extraneous, 
vitiating activities are excluded. It alone produces Value. 
It alone contributes to the body politic the various foods 
upon which all current existence, — all work, all play, all 
genius, all patriotism, — maintains itself and upon which 
all growth, of whatever sort, is based. What a country 
lacks of Production, as defined above, it fails of real 
existence, is become a pretense and a parasite, fed by 
others and reveahng their strength, not its own. No 
claim may it lay to the nobility and divinity of life, except 
as may a fossil shell which still reveals the beauty of a 
life that is past and gone, or as the tottering impotence 
of a senility which mankind protects and reveres for what 
it has been. What a country possesses over and above 
material Production may be more complex or more deli- 
cate, or at least more highly esteemed; but it is all the 
fruit, the foster-child, the slave, — the dependent or 
resultant, under what name you please, — of Production: 
fed by it alone, rising possibly when it flourishes, dying 
certainly when it falls into decay. 



PRODUCTION AND CONSUMPTION 31 

Exchange. The value which each laborer in such 
a productive community consumes in support of his own 
life is that, or a portion of that, which he has himself pro- 
duced. Originally, in pioneer life, this was literally so. 
Everything which the individual possessed was wrung 
from the soil by his own direct efforts. He cleared the 
land, built the house, raised crops, chased game for 
food and maintained flocks for the manufacture of cloth- 
ing; the housewife performed all sorts of productive 
operations now relegated to the factory. ^ 

To-day all this is changed. Each man specializes upon 
the production of one thing and produces that one to an 
amount which would constitute an enormous surfeit, were 
he and his family the sole consumers of it. But to-day 
universal Exchange enters, whereby he is enabled to trade 
the bulk of the special thing which he produces for the 
product of other laborers' toil. But what he receives 
and consumes is none the less the value which he himself 
produced, although it may not be the identical article. 
While he has exchanged forms of value, he has not 
altered amounts; he cannot get something for nothing. 
What he gives must be the equivalent in value of what he 
gets. Unless he has produced value he cannot consume 
value. 

Therefore let all fiction regarding the income of pro- 
ductive labor being drawn from capital, or of its being 
presented by employers, be forever sunk into oblivion. 
The laborer, unless he be interfered with, gets what value 
he produces. He gets it because he produces it. No 
complexity of method may ever alter or more than dis- 
guise that fact. He produces it because he wants it, for 

2 In all such economic discussion the family appears, of course, as a 
unit, represented by the father or other male head. It is also to be noted 
that this method of life has now gone irretrievably from us, by a progress 
in the arts and sciences which cannot be reversed. 



32 THE COST OF COMPETITION 

consumption in support of life. The opportunity to do 
these things ; to produce and to consume is a part of Life. 
Where it comes from does not concern Economics. It is 
commonly accepted that God gave it, with all the respon- 
sibilities and privileges appertaining thereunto. If the 
life and the privilege of living be ever found to have been 
separated, it is because man has sundered what God had 
joined. 

The income of value enjoyed by Labor, therefore, is 
what it produces, or some part of it. Accident or design 
may make the income less than the total amount pro- 
duced, by the destruction or abstraction of some portion. 
Nothing can ever, by any possibility, make it greater, — 
except, of course, by the gratuitous addition to it of some- 
thing taken from some other fraction of the laboring 
body. 

Productivity. The current amount of value pro- 
duced by an individual or a class or a community, or its 
rate of production, is called its productivity. It can occur 
only as a result of activity of some of the sorts already 
listed as together constituting Production. 

Wages. The portion of its productivity actually re- 
ceived by an individual or a class is called its wages. 
Wages might, and theoretically ought to, equal produc- 
tivity. In actuality it is always something less. The 
ratio of wages to productivity, for an individual or a com- 
munity, will hereinafter be known as its earning efficiency. 
From the above it is plain that the term wages covers 
the income of all of the different sorts of activity listed 
under Production. With many of these sorts the actual 
payment, in real life, is known as salary. Such is the case 
with most superintendence. With other sorts it is known 
as professional fees. Such is the case with medical prac- 



PRODUCTION AND CONSUMPTION 33 

titioners, for Instance. They fall, in economic analysis, 
under the head of skilled labor; that is, they produce 
value and they produce it by their own exertions, not by 
those of others. The economic idea of wages, therefore, 
is far different from the popular, but loose and useless, 
idea of the term: of a dollar or so per day paid to an 
ordinary laborer, or even of five times that sum paid to a 
skilled manual operative. The economic term wages 
makes no distinction whatever between mental effort and 
brute strength; It relies solely upon the fact that the 
wealth received comes as a return for effort expended in 
the production of value. 

Consumption. Where these processes which we have 
just defined collectively as production end. Consumption 
begins. There is no natural interim. Everything in the 
nature of the transformation or transportation of 
material previous to its actual consumption (except trans- 
portation, which does not result in increase of value) must 
be regarded as existing solely for its sake. The necessity 
of consumption in order to maintain life is the sole 
economic reason for production. That which does not 
alter the form or character of the article itself into a 
greater potentiality for the support of life, or in moving 
it really toward the Consumer, is not aiding in satisfying 
Consumption and cannot be called a part of Production. 

This sweeping statement will receive much more atten- 
tion and support later in the argument. It is announced 
here in order to attain accuracy of definition and to draw 
preliminary attention to an all-important but universally 
neglected distinction. 

Further, the Consumer must not be confused with other 
economic classes by including under the same term the 
Purchaser. The purchaser is not a consumer unless he 



34 THE COST OF COMPETITION 

consumes, unless he purchases solely for his own consump- 
tion, for destructive biologic absorption, and not for fur- 
ther sale or manufacture. To-day the great majority of 
purchasers represent not only intermediate, incidental 
steps in the great process of Production, but they represent 
activities which are not even incidental thereto, but which 
occupy a quite distinct class because evincing a quite dis- 
tinct nature. 



Ill 

SPECIALIZATION AND COORDINATION 

FROM the bare essentials of the process of produc- 
tion attention may now progress to a considera- 
tion of its parts and of the method of their 
inter-relation. 

Modern methods of production not only illustrate, but 
they are fundamentally characterized by, a law, a pro- 
cess, which runs continuously and insidiously through all 
forms of organic existence. Not only are all economic 
processes based upon it, but all other organisms than the 
economic body politic exemplify it. In its broadest sense, 
in their animate activities. So universally does this law 
underlie all natural phenomena, including, therefore, all 
economic phenomena, that it Is necessary to devote to Its 
discussion this separate chapter. All through the current 
work it will be referred to and exemplified repeatedly. 
Only when this argument Is finished will the reader pos- 
sess the writer's sense of Its importance in economic 
thought. This law Is that of coordination and 
specialization. 

It can be defined best by illustration, and for this pur- 
pose it must be reduced to its simplest possible form. 
To this end will be appropriated Mr. Walker's familiar 
illustration of the typical primordial economic society: 
the supposititious colony of fishermen abiding upon a rocky 
shore and relying solely upon the sea for Its food-supply. 
It Is to be supposed that It possesses no boats nor other 
implements of its trade, except the simplest hooks and 

35 



36 THE COST OF COMPETITION 

lines. In It the head of each family must be regarded as 
supplying by his own labor all of the wealth consumed 
therein; and that wealth must consist solely of fish. 

Under these primitive conditions of production man 
would be subject to the maximum of hardship and of 
uncertainty of existence and the minimum of comfort and 
ease. The natural expansion of population would soon 
bring life into sharp contact with that limiting law of 
primitive existence. 



The Law of Diminishing Returns 

This law, stated most briefly, covers the fact that, as 
increasing supplies of labor are expended upon a given 
natural field of effort, the return to each additional laborer 
becomes inevitably less and less; that is, on any given fish- 
ing-waters, or hunting-ground, or tillable field, or natural 
opportunity of any sort whatever, the greater the amount 
of labor or the greater the number of workers on that 
field the less must be the return per unit of labor. The 
first comer gets the most fertile portion of the field or 
raises that amount of grain which grows with the least 
attention; perhaps, as In savage life, using only that which 
grows without any cultivation. Each additional bit of 
labor is spent in forcing from more and more reluctant 
soil a smaller and smaller response In fruit. 

In the present Illustration, in the colony of fishermen, 
the best fishing-grounds would soon be monopolized or 
fished out. Less productive ones would have to be 
resorted to by the later comers, and as the community 
grew In size the average production of fish per man would 
grow steadily less and less. Moreover, from the adver- 
sity of variation In natural condition of environment there 



SPECIALIZATION AND COORDINATION 37 

would be no shelter. When fish were plenty all would be 
well; but when fish were scarce the population which had 
been allowed to come into existence by the previous plenty 
would have no other recourse than to starve. 

Finally, a diet so narrow as an unvaried one of fish, 
even in plenty, would be quite inadequate to support a 
grade of life higher than a very low type of savage. 
Nevertheless, for the sake of clearness of analysis, it is to 
be supposed that primarily these people had nothing to 
eat but fish. 

The conditions which are thus illustrated in their 
simplest form, if assumed to apply to the whole of modern 
society, with its complex organization, would place it 
approximately in the same precarious, uncomfortable and 
primitive condition as to its food-supply that weighs upon 
savage life. The only difference would be in degree. All 
that is necessary for this assumption is to suppose the 
exaggeration of the law of diminishing returns to cover 
every form of raw material, instead of a single one, and 
the most civilized society must stand face to face with 
more or less complete famine at all times. The devices 
of scientific production for meeting this state of affairs: 
the invention of more rapid and efficient machine-methods 
as a substitute for hand-labor, the accumulation of stocks, 
the development of cold-storage warehouses, etc*, could 
never hope to do more than modify this rigorous fate, 
never to remove it. So long as each man should confine 
his efforts to the supply of his own wants, and his methods 
to those of his neighbors, no matter how rapidly all might 
improve their methods simultaneously, the community 
must always find itself periodically face to face with famine. 

This assumption, backed as it is by the more than super- 
ficial evidence that this is just the situation in which even 
civilized humanity finds itself, has actually been made and 



38 THE COST OF COMPETITION 

formally enunciated, now nearly a century ago. It 
received prompt and wide adoption, under the name of 
the Malthuslan doctrine, after Its propounder, Mr. Mal- 
thus. Translated into the most general terms, to fit 
broadly all occasions, this doctrine may be stated as 
follows : 

That population tends to increase with a geometric 
ratio, while the increase in total productivity is not pro- 
portional to it. Hence, the growth of population expands 
against the limits of food-supply as a balloon against Its 
net, and must perforce burst its bounds in ugly waste of 
life In ** war, famine and pestilence." 

This doctrine fell upon the public ear at a time when 
British labor-agitation and factory-legislation made It 
very acceptable to the privileged, and hence conservative, 
classes. It was hailed as conclusive proof that the horror 
of a ** surplus population " was Inevitable, that It was 
from the hand of God, and that legislation looking 
toward its modification or amelioration was therefore 
futile and absurd. 

This attitude and doctrine have survived until the 
present day with surprising tenacity. The privileged 
classes love the doctrine, because it frees their conscience 
from pressure toward the modification of their privileges. 
The doctrinaires love it because it Includes a reference to 
the great, underlying law of all human existence, of all 
organic existence, in fact, which has not yet attained its 
zenith and become mordant: That the natural force of 
growth will always press against the natural limitations 
of free growth until pain results. But this broad law has 
never broadly justified the artificial perpetuation of 
unnecessary pain. Man's instinctive revolt against suffer- 
ing on the part of his fellow-man has proven more accu- 
rate, in experience, than has the half-work of pure intellect. 



SPECIALIZATION AND COORDINATION 39 

For a broad glance over the past shows that every atom 
of accumulated history, taken in Its proper relation to the 
rest and not piecemeal, gives the denial to the broad and 
exclusive applicability of the Malthusian doctrine. The 
average Individual productive power has too obviously 
increased, and not decreased, taking all classes Into 
account, with the passage of the centuries. The average 
activity of famine, pestilence and war in human affairs is 
steadily on the decline. No party is so vehement In urg- 
ing that wages and standards of living are higher to-day 
than ever before as is the laissez-faire school of conserva- 
tives; yet they are the very ones who cling to the Mal- 
thusian idea with the energy of despair. 

The suspicions which are aroused by these fundamental 
discrepancies between the facts of history and the Mal- 
thusian doctrine are rapidly aggravated when inquiry is 
made Into the basis for its projection. This basis is the 
assumption that the law of decreasing returns may prop- 
erly be applied to modern economic society as a whole. 
Let us Investigate the validity of this assumption. 

The effectiveness of the law of decreasing returns 
depends absolutely upon one assumption in the premises, 
viz. : That each additional item of labor expended upon 
a given natural field of opportunity shall take up the same 
task in the same manner as that already at work. The 
newcomers must use the same tools and the same methods 
as those already in use.^ The raw material must pass 
through the various pairs of hands in parallel, as the 

1 The reader is to note most carefully that improvement in method, by 
the application of inventive science, is no answer at all to this situation, 
except in so far as it may aid one individual or class for a short period of 
time. So soon as the improved method has become a matter of general 
adoption the situation is just what it was before the invention was made, 
as to the jeopardy of life and happiness. A larger population has sprung 
into existence and enjoys that jeopardy, but that is the sole gain. 



40 THE COST OF COMPETITION 

electricians say, dividing itself between them quantita- 
tively. Under this assumption, and this only, the law 
holds true and the resultant famine and pestilence 
ensue. 

Fortunately, this is an assumption which is warranted 
in the current history of modern industry only in a semi- 
occasional and microscopic way. Instead, it has always 
been true that, upon any field of effort whatever, so soon 
as the natural increase in population thrust upon that 
field an amount of homogeneous labor which, by the law 
of decreasing returns, exerted an appreciable pressure 
upon the workers (political liberty being assumed to 
exist) , that body of labor split itself up into a number of 
cooperative departments, each concerning itself with only 
a single portion of the task. From a state of homoge- 
neity it became heterogeneous. 

Under such conditions the raw material would pass 
through the several portions of the laboring body in 
series, instead of in parallel. Within each portion, of 
course, the work would be divided in parallel, according 
to the number of individuals composing it, and within 
that portion the law of decreasing returns would remain 
in full power. But to the now composite body of laborers 
as a whole it would no longer apply. Between the several 
departments conditions would be quite different. Each 
department would specialize itself upon its separate por- 
tion of the task and devote itself solely to it, and the only 
limit to the extension of this process lies plainly in the 
number of workers. Only when each individual has 
become a specialist, constituting himself an entire depart- 
ment of the community's work and developing his own 
special methods, will the specialization be complete. 

From such specialization great gain in efficiency would 
ensue. It would be derived from two sources: 



SPECIALIZATION AND COORDINATION 41 

(i) Economy of Time. The losses of time inciden- 
tal to preparation for and cessation from work, both of 
which are incurred when change is made from one to 
another sort of labor, would be then reduced to a 
minimum. 

(2) Increased efficiency of individual effort, due to 
the skill which results from long-continued practice at one 
simple task. 

The illustrative community of fishermen has purposely 
been restricted to such simplicity that the process of sub- 
division and specialization of labor there finds very little 
opportunity for application. Nevertheless, even there it 
is obvious how great would be the increase in the pro- 
ductivity of the entire community if, instead of each man 
doing for himself all of the different sorts of thing 
involved in fishing, quite independently of the rest, the 
three distinct tasks: (i) securing bait, (2) fishing and 
(3) transporting fish and bait along the shore, were 
allotted to three separate subdivisions of the laborers. 
The gain would obviously be most marked. 

Under these narrow limits of possible complexity of 
industry the population would soon expand to a compres- 
sion against the limits of opportunity as painful as it 
was originally. But this is only because of the artificial 
limitation of complexity, to a three-part form. If, on the 
other hand, inventive effort is supposed to enter, bringing 
with it canoes, dories, trawls, nets, schooners and 
steamers, each used by separate tradesmen In a specialized 
way, the progress toward the opulence of to-day is 
obvious. 

Nor Is this advance at all due to the ingenuity of the 
Inventor and the efficiency of these more complex devices. 
To appreciate the truth of this statement imagine the 
modern fishing-gear completely In existence, but suppose 



42 THE COST OF COMPETITION 

each fisherman compelled by law or his own ignorance 
or bigotry to do all of these several tasks himself, not 
subdividing them and cooperating with his fellows, but 
each man doing everything Incidental to the transfer of 
the fish from the sea to the table: securing his own bait, 
making his own lines and nets, propelling his own boat, 
catching his fish and peddling his catch on shore. Plainly 
not a fishing-steamer, not even a schooner or a sloop 
could leave port; hardly could a net be cast, or a trawl 
be set and run. Fishing by hand-line would be the only 
method available; ten miles from market would be the 
maximum radius of operation. ^ 

2 The law, if it be stupid enough, may do this very thing, may prohibit 
labor from coordination and specialization to the fullest extent possible 
with the tools already existant. It not only may do it, but it now does it, 
in an equivalent which diflfers from the illustration just presented only in 
the greater magnitude of its power for mischief. Massachusetts, for 
instance, boasts the finest industrial laws in the world; yet its statutes 
throw every possible obstacle in the way of its citizens cooperating with 
each other to the greatest possible degree, by their discouragement of com- 
bination. In Worcester, for example, the interurban trolley-traffic with 
Leicester and Spencer was forced for years to travel along a crooked, slow 
and most unattractive back-route paralleling the straight Main-Street line 
to the center of the city, simply because the motormen of the Leicester cars 
were forbidden to cooperate with the operatives of the local city lines by 
using the same tracks ; because, forsooth, the two sets of men were employed 
by different competing companies. Since legal permission to consolidate 
was obtained and the competition has died out, the back-route has been 
used only by small cars running thrice hourly. There was no natural 
reason whatever for any through traffic passing that way. Yet for years 
a large volume of passenger-traffic was artificially compelled by law to 
go by that route. How many hours of aggregate time and how many 
foot-tons of nervous energy for how many people were wasted for the 
community during all those years no one will ever know. What good 
the citizens ever got from this duplication of managing companies and 
the competition between them no one can say. The price was the same 
under both plans — or even higher, considering the absence of transfer- 
privileges, under competition — and under competition the service was very 
much the poorer. Yet this state of affairs was thrust upon us by Massa- 
chusetts law and supported by Massachusetts public opinion. 

Every reader, whatever his locality, can parallel this illustration for his 



i 



SPECIALIZATION AND COORDINATION 43 

The only opportunity for the further development of 
specialization by the primitive community of fishermen 
in illustration would be that by the Introduction of super- 
intendence. Each of the three departments: of bait- 
supply, fishing and transportation, respectively, might prof- 
itably allot to one man, with assistants, the duties of fore- 
man. There would also be need for a central bureau of 
communclatlon between the three. This would very con- 
siderably widen the opportunity for specialization, from 
a three-part to a seven-part form. By this added super- 
intendence, too, invention would find its natural and easy 
path for entrance. 

In the organization thus outlined would be visible, for 
the first time In these pages, the modern factory-system. 
Under any such system the characteristic of its method of 
Organization is that It involves 

(a)^ The subdivision of the total available fund of 
labor into parts. 

(b) The specialization of these parts upon their sev- 
eral tasks. 

(c) A truly cooperative coordination of the parts into 
a concrete, organic whole. This subdivision and speciali- 
zation may be carried as far as the complexity of the com- 
plete task or the number of laborers permits. Either may 
constitute the limit. In the latter case, of course, each 
department would consist merely of a single laborer. 

Under these conditions comes into operation, in place 

own district. The entire American express-train service on the steam- 
roads, of which we boast superiority over the rest of the world, has been 
rendered possible chiefly by the consolidation and cooperation of the 
myriad of little roads of fifty years ago. There is hardly a mechanical 
device which now contributes to speed, comfort and safety in that traflic 
which would still be profitably available were these consolidations to dis- 
solve back into the multiple independent managements of, say, 1855, when 
it took five changes of cars and a long day's hard labor to travel from 
Boston to New York. 



44 THE COST OF COMPETITION 

of the Law of Decreasing Returns, as the total fund of 
labor increases, 

The Law of Increasing Returns 

That when any two or more laborers at a given task 
jplit up that task into two or more distinct and different 
portions, upon each of which a corresponding portion of 
the available labor-force concentrates its efforts and atten- 
tion, the average individual productivity of the community 
is increased, in proportion to what it was previously , by a 
ratio consisting of some geometric power of the number 
of subdivisions of the task. 

This law may be given simple mathematical statement 
in the following form: If P^ be the average total pro- 
ductivity of a community where the general body of pro- 
ductive labor is partitioned into m subdivisons, and if a 
be a coefficient, then 

F^am'' .... (1) 

Since the average individual productivity is the average 
total productivity divided by the industrial population, 
then, if « be the number of workers, and p^ the average 
individual productivity, 

V P' ^' (2) 

n n 

But these equations can hold true only wh^e « is a con- 
stant or else where the natural opportunity is so wide, as, 
for instance, in a virgin continent, that ordinary increase 
in the population feels no action of the law of decreasing 
returns. 

The effect of the law of decreasing returns under a 
pressure of increasing population against the limits of 



SPECIALIZATION AND COORDINATION 45 

natural opportunity may be expressed as follows: If P'' 
be the average total productivity of a community where 
the general productive task is subdivided between the 
several workers in parallel, where n is the variable 
number of workers and consumers and b is 3. coefficient, 
then 

F'^bn' . . . . (3) 

If />" be the average individual productivity under 
such conditions, 

f=?l = bf^-^ ... (4) 

n 

If p be the average individual productivity under a 
variation of both industrial population and of number of 
subdivisions of task, that is, the degree of specialization 
and cooperation being a variable and less than complete, 
then 

p = ab m" n''^ . . . (5) 

If It be assumed that the degree of specialization possi- 
ble is determined by the population, the number of sub- 
divisions tending ever to increase with the population 
until the number of workers within each subdivision re- 
mains at a fixed average, which seems to be the condition 
of equilibrium in the face of economic, inventive and 
populative growth, then, c being the reciprocal of this 
minimum number, 

m =^ en . . . . (6) 

and 

p=ab €"7^'^-^= Cff^y^ . . (7) 

In this equation C would be a constant for any known 
social configuration, as would also h^ x -\- y -^i. 

In the actual economic society, where all conditions are 
constantly fluctuating, the general equation (5) is of 



46 THE COST OF COMPETITION 

course the only one which may apply with accuracy. 
Nevertheless, it is broadly true that the statements made 
in equations (6) and (7) do apply approximately. 

From the data at hand it is impossible to assign to the 
exponents x and y any values at all exact. Indeed, they 
are neither of them constants. But from the form of the 
equations, from the verbal statement of the Laws of In- 
creasing and Diminishing Returns and from our general 
knowledge of public facts, the following observations may 
be laid down with confidence: 

( 1 ) The value of x must be a positive quantity, usually 
exceeding unity. 

(2) The value of x will be a maximum when w is a 
minimum, and will always be an inverse function of m. 
That is to say, the first subdivision of a homogeneous 
community into specialization does the most good. 
Further subdivision and specialization accomplishes less 
and less. This statement, it must be noted, assumes a 
stationary condition of inventive science and, therefore, a 
fixed field for differentiation. But each step in advance 
in technical science increases the complexity and hetero- 
geneity of industry, and hence opens a new gate to the 
profitable expansion of specialization and coordination; 
that is to say, a fresh chance to increase m without de- 
creasing X, Thus the value of x can remain positive until 
the number of subdivisions has equalled the industrial 
population, beyond which limit it is physically impossible 
to go. While this last statement may be strongly ques- 
tioned, from the evidence of existing industrial conditions, 
yet it will develop, before the anaylsis is finished, that the 
present limitation of the indefinite increase of the variable 
m is not due to the fact that x naturally becomes equal to 
zero, but to the fact that another and quite distinct factor 
of inefficiency enters to cancel and conceal its effect. 



II 



SPECIALIZATION AND COORDINATION 47 

(3) The value of y must be positive, but less than 
unity; for it is clear that while an increase in the popula- 
tion, under a fixed regime, must increase the difficulty of 
production, yet the difficulty does not increase in full pro- 
portion. Each increment of population does succeed in 
finding some addendum to the natural resources of the 
community which, even if decidedly less than the average 
resources enjoyed by all of the individuals who have pre- 
ceded him, is still only slightly less advantageous than 
that enjoyed by the one individual who next preceded him 
in the search for opportunity. ' 

(4) The value of y must remain positive, to whatever 
extent the population may increase, at any rate to any 
limit now visible to the imagination. For even if it be 
true that the civilized world, in its occidental expansion 
of population, has now swung completely around the 
globe and has begun to feel a rigid limit to the further 
expansion of its geographical footing, yet the one signifi- 
cant fact of the times is that scientific and inventive re- 
search is daily becoming more rapid and effective in its 
progress, opening ever wider fields of natural resource 
quite distinct from the geographical; while at the same 
time a topic of the day of growing importance is the rising 
fear that the rate of increase of the population is in danger 
of decline. While it will be shown later that the latter is 
an incidental, instead of a fundamental, factor, yet the 
former is not. It may be expected to grow more effec- 
tive with the progress of the centuries. 

(5) All this being so, and consequently the value of 
y — being ever negative In value, it is plain from Equa- 
tion (5) that, under the normally existent condition of 
affairs, any increase in the value of n, or in population, 
must decrease the average individual productivity by set- 
ting into operation the Law of Decreasing Returns, while 



48 THE COST OF COMPETITION 

any Increase In the value of m, the degree to which the 
process of specialization and coordination Is permitted to 
enter, sets Into operation the Law of Increasing Returns, 
to the elevation of the average Individual productivity. 
The first Is an increase In the number of workers working 
in parallel; the latter Is an Increase In the number of work- 
ers working in series. 

(6) The net value of the exponent x -\- y — i will 
depend, of course, upon the departure of x and y from the 
mean value of \- When they average that quantity In 
value the value of the exponent will be zero, and the aver- 
age individual productivity will remain stationary under 
fluctuations of population and method; when they are 
higher In value the Individual productivity will Increase 
with the population; when they are less In value the Indi- 
vidual productivity will decrease with the expansion of the 
community. The natural tendency of progress. In the 
face of human nature and Its limits In Intelligence and 
adaptability, is for n to Increase alone, m remaining a con- 
stant and c decreasing In proportion with n. But this line 
of progress develops diminishing returns and places life 
under uncomfortable pressure. While not taking the 
position that this pressure urges the Individual directly 
and consciously toward specialization. It can be stated un- 
hesitatingly that the agitation resultant from this pressure 
Indirectly develops specialized methods, which then sur- 
vive as the most fit; while the pressure does directly urge 
the individual away from the attractive freedom of Inde- 
pendent action and lead him to subject himself to the 
restraints of cooperative specialization. In both ways, 
therefore. Increase of population leads to a loss of eco- 
nomic equlllbrum which Is regained only when m increases 
with n and c remains a constant. 

In this connection, too, it is Important to note that the 



SPECIALIZATION AND COORDINATION 49 

value of X Is greater the greater Is the dissimilarity of the 
several parts Into which the total Industrial task Is sub- 
divided for specialization. It is naturally greatest when 
the subdivision is first undertaken, growing less and less 
as the subdivision becomes more effective and the differ- 
entiation of task from task approaches the possible limit. 
(7) It is of the utmost importance to note that the 
limit to the degree of specialization which has been effec- 
tive in history has seldom or never been the physical or 
natural one. In the various countries and at various 
times the social Institutions inherited from the past, exist- 
ing in the form of law, custom and popular prejudice, ex- 
pressed through religious rule or doctrine, caste-law, 
established class-privilege, monarchical oppression, or 
through mere fixity of mental temperament, have sepa- 
rately or together confined the possibilities of altering the 
methods of an established industry, or of introducing a 
new industry, far below what they otherwise might have 
been. With the progress of human Intelligence and lib- 
erty throughout the centuries this limitation has ever be- 
come more and more elastic and has given way more and 
more readily to the pressure of individual enterprise. In 
our own country and times this combination of geograph- 
ical, political and intellectual liberty is apparently greater 
than at any other time or place. In consequence, the ex- 
pansion of the process of specialization and coordination, 
and the resultant production of wealth, have become 
phenomenal. Yet it Is to be noted here, as already stated, 
that the bars which hem this expansion of method from its 
natural limits are not yet all down. One institutional one 
of great force and rigidity remains unassailed. To dis- 
cuss the nature of this bar is the office of later pages; but 
for the understanding of these present ones it is sufficient 
to keep well in mind this fact. 



50 THE COST OF COMPETITION 

(8) It is finally of the utmost Importance to note that 
when the conditions exist for the operation of the Law of 
Decreasing Returns the arrival of each additional member 
to the community, whether by birth or by immigration, 
stands as a detriment to the welfare of those already there. 
Under conditions which would force the Law of Increasing 
Returns into operation the opposite would be true : each 
additional arrival would ameliorate the lot of life for those 
already at work. While the effect of any single case, in a 
community of appreciable size, would be invisible, yet 
sooner or later the phenomenon must become publicly felt. 
It will then find expression in a myriad of different ways, 
chiefly of ethical import: in a body of law and public 
opinion antagonistic to and hypercritical of those appar- 
ently " crowding in " In the former case, or a public atti- 
tude of welcome to all without question in the latter. 

Between these two Laws: of Increasing and Decreas- 
ing Returns, respectively, although in their opposite ex- 
tremes they bear the strongest possible mutual contrast 
as to their effect upon the fortunes of mankind, there is 
no sharply visible dividing line. Mathematically the 
division Is sharp : values for the exponent x -\- y — i 
above zero proclaim increasing, those below decreasing, 
returns. But in actual life there is no method known as 
yet for ascertaining what is or what will be the value of 
the exponent, except the purely empirical one of cut-and- 
try experience. Both variables, x and y, are at work at 
once. The population Is ever increasing; so Is the com- 
plexity of all industry. We do know, however, that the 
greater the complexity of the total task and the greater 
the freedom to develop its possibilities by substituting 
scientific methods of combination and cooperation for the 
old-fashioned parallel and uncommunicative, or even 



SPECIALIZATION AND COORDINATION 51 

jealous, independence, the greater will be this exponent 
which measures the geometric ratio of increase of individ- 
ual productivity and welfare with growth of population 
and material knowledge. The scientists and inventors 
are caring for the growth in physical complexity needed 
to permit a constantly increasing degree of specialization; 
let the legislators look to it that they supply the requisite 
freedom for following up this opportunity with a corre- 
sponding growth of cooperative coordination. For spe- 
cialization, without coordination to a single undivided end, 
is both useless and impossible. 

The actual operation of the Law of Increasing Returns 
is so obvious upon every hand that it seems needless to 
call attention to it. Not only is every factory, with its 
little army of cooperative workmen, its multitude of 
departments and its complex refinement of organization 
an example of its truth, but the entire circle of factories, 
industries, trades and professions, organized, specialized 
and correlated by the interdependence of the natural 
forces with which they deal, is another and a greater one. 
Each step in the progress of modern science expands in 
extent and develops in intricacy the net of mutual attrac- 
tions between the erstwhile independent industries. In 
fact, the entire aspect of modern, international civiliza- 
tion, from the world-circle as a maximum down to those 
little individual groups of workers wherein subdivision is 
impossible, as a minimum, is nothing but one vast illustra- 
tion of coordination and specialization, with the resultant 
creation of increasing returns to each worker with each 
advance In complexity of differentiation. Just as it has 
developed the fishing-industry from the primitive hand- 
line and spear to the modern fleet of high-speed schooners 
and steamers, so has it brought all other industry from the 
days of the pioneer jack-at-all-trades, with the household 



52 THE COST OF COMPETITION 

spinning-wheel, loom and shop, to the present magnificent 
intricacy of organization and perfection of output. In- 
vention is not what has done it. Invention has done 
its share; but the most skilful invention, without co- 
ordination, is as helpless toward accomplishing it as is 
the discovery of new supplies of raw material. Each of 
these accomplishments, in its every detail, has lain equally 
latent throughout the ages, awaiting the day of that 
advance in civilization which might make it profitable for 
them to come forth. Every single invention has appeared 
before man was sufficiently coordinated properly to make 
use of it, just as each form of raw material has been dis- 
covered before full knowledge of Its potential value was 
attained. What both have waited upon has been the 
advent of the political and intellectual freedom of man, 
his emancipation alike from oppressive law and repressive 
bigotry, to make possible those changes in his methods 
which might develop these- bare potentialities Into profit- 
able properties. 

For instance, our Americaa bridge-builders, working In 
India with native labor, found that whereas each Amer- 
ican workman is ready, upon need, to take up any job on 
the construction, each native Is prevented, by caste, from 
doing more than one thing. The resultant inefficiency 
may be imagined. Thus, in India, Is progress In pro- 
ductivity chained down by caste. Here in America we 
have no rigid caste; but our progress in productivity Is 
perceptibly hampered, nevertheless. We are shackled by 
both written and unwritten law : by the fear which lies In 
nearly every man's heart to adopt methods truly coopera- 
tive, because they may be novel, and by the public statutes 
which embody that general fear in the law of the land. 



IV 
EXCHANGE 

IT has been pointed out that the grade of life possibly 
attainable in the illustrative seashore colony which 
subsisted solely upon fish could never be anything 
more than a very low one. The reasons were : 

( 1 ) The brutal effect upon the population of every 
variation in the natural supply of raw material : of inevit- 
able famine when fish were scarce, of no alternative to 
gluttony when they were plenty ; and 

(2) The depressing effect of mere monotony of 
existence. 

Let it be supposed, however, that the situation is im- 
proved by a treaty of peace with an inland tribe of 
hunters, who bring to the shore game which they are 
willing to exchange for fish. The gain here is manifold 
on both sides. In the first place comes a purely biologi- 
cal gain, under the natural law that diversity of envi- 
ronment (in this case, of diet) leads to diversity of 
talent. 

In the second place, the natural irregularities of food- 
production are somewhat smoothed over. When fish are 
scarce game is apt to be plenty, and vice versa. More- 
over, in times of such scarcity of fish It would naturally 
result that the difficulty of obtaining the few fish would 
lead to a high price for fish in terms of game, and the 
few fish of the fishermen would bring them in much more 
nutriment, In the shape of game, than if exchange had been 
impossible. The same Is true of the hunter in the case of 

53 



54 THE COST OF COMPETITION 

a game-famine; for the chances are doubly against the 
simultaneous occurrence of famine of both fish and game. 

Again, when fish are plenty, instead of their being 
wasted by a population unable, even in savage gluttony, 
to enjoy more than a portion of them, it becomes possible 
to purchase with them supplies of game of a more rare 
sort, coming from distant and inaccessible localities and 
considered as a luxury. 

The biologic response to this step In evolution would be 
prompt. The standard of living would be elevated, as 
regards both security and diversity of life, the two corner- 
stones of civilization. 

Exchange. Thus is added, to the processes already 
listed as together constituting Production, Exchange. 
Exchange occurs as a connecting link between the several 
steps of specialized production, and also between produc- 
tion and consumption. The pure process of exchange, as 
the word will be strictly used in these pages, involves the 
two following activities, and no others: 

(i) Mutual transfer of ownership between two co- 
operating Producers or bodies of Productive Labor, or 
between Productive Labor and Consumer, for the purpose 
of mutual benefit in obtaining thereby an article better 
fitted for consumption by each, either as raw material for 
the further production of value or in actual consumption 
in the support of life; for these are the only sorts of trans- 
fer between Individuals which can result In an increase of 
Value to the community; 

(2) Accountance or record of the above. 

The value of exchange is to be expressed In the same 
language which was applied to transportation. The two 
are practically Inseparable. In some cases transportation 
occurs without exchange of ownership, as does also ex- 
change without transportation; but such cases are In the 



EXCHANGE 55 

minority. Yet the difference in nature between transpor- 
tation and exchange should be kept clear and distinct. 
Transportation is valuable In that It alters the natural en- 
vironment of the commodity: corn surrounded by corn- 
fields is of little value ; that same corn surrounded by fac- 
tories or coal-mines becomes of great value. Exchange 
is valuable in that It alters the human environment of the 
commodity. When bread passes from the possession of 
a baker to that of a shoemaker It gains in value ; but bread 
sold from one baker to another is still, supposedly and 
naturally, surrounded by a surplus of bread and no gain 
in value ensues.^ Since the great majority of people 
maintain a permanent locality of residence, transportation 
usually means change of ownership as well as change of 
locality. But It is the question of alteration of environ- 
ment which establishes the gain in value or the lack of It. 

Without perfectly free exchange between the several 
subdivisions of laborers specialization cannot be effective, 
nor even effected. Its very existence Is coupled with the 
word coordination. No community can develop the 
value lying dormant in Its latent potentiality for specializa- 
tion and coordination unless it removes absolutely all 
obstacles from the path of exchange. 

It Is by this means that the splendid system of special- 
ization visible in our modern factory-system has been 
brought about. There the coordination Is the most per- 
fect devisable. No obstruction to the freest possible ex- 
change is permitted. Not only do the pattern-shop, the 

1 Here is visible one of the inconsistencies of the commercial market. 
On 'Change, if wheat be sold to one already possessing a surfeit of wheat, 
giving him a "corner," the price is increased. There is, however, no in- 
crease in value to justify this rise in price. When the market "breaks" 
and those possessing a surplus of wheat begin to sell, the value released 
to the community is obvious; but the price of wheat, instead of being 
increased by its increase in value, is decreased. 



56 THE COST OF COMPETITION 

foundry and the machine-ship, for instance, of any manu- 
facturing establishment cooperate, by consultation, etc., 
so as to direct their efforts best to the common end, but 
the articles which pass from one to the other, forming the 
finished product of one department and the raw material 
of the next, do so under a splendid system of cooperative 
liberty. The pattern-shop is credited with what patterns 
it turns out, not because the patterns are themselves sal- 
able to the public, but because the foundry needs them. 
The foundry is credited with the crude castings which it 
produces because the machine-shop needs them. Each 
department is charged with its own proper expense. The 
machine-shop is charged with the castings received as raw 
material and is credited with the finished product; which, 
it may be supposed, is the first step in the combined opera- 
tions which results in an article salable on the open market 
or consumable in the economic sense. 

Herein the value of exchange without transportation is 
purely that it makes possible specialization. The iron- 
establishment works under such a system at a much greater 
efficiency than it would if each man tried to make his own 
patterns, form his own mold, pour it and then machine 
his castings himself, in turn. Such methods have been fol- 
lowed. They formed, in the beginning, the foundation of 
our country's economic greatness. But they are now out- 
grown, antiquated and fearfully inefficient In comparison 
with modern ones. 

The Central Office. The device which effects this 
exchange with such perfect smoothness and justice is the 
Central Office. Everything produced by any of the de- 
partments belongs, nominally, to it. The value produced, 
as was stated before, really and obviously belongs to the 
individual workers who produced it; but it is found that 
the only way to conserve to them this value, in the face of 



EXCHANGE 57 

the complexity of modern Industry and trade, Is for the 
ownership of all commodities In the shop to be legally 
vested In the Central Office ; which guarantees, In effect, 
to return to each Individual the value which he has pro- 
duced. 

The Central Office of course cannot accomplish this 
service without cost, and must charge for It. The value 
which each Individual produces Is taxed to a certain pro- 
portion, which tax Is retained In the Office to maintain Its 
expenses. The remainder, which Is really the value 
actually produced by the workman. If the transaction has 
been equitably conducted, Is returned to him under the 
name of wages: his real productivity being his apparent 
productivity minus the tax for cost of exchange. Because 
the privilege of exchange much enhances his apparent pro- 
ductivity, his wages, or his real productivity, amounts to 
more, even when thus taxed therefor, than they would 
without the privilege of exchange. Therefore, since 
exchange produces value, by absorbing raw material in the 
way of ledgers and ink, and labor in the form of clerks, 
aiding production by widening coordinate specialization, 
this Central Office Is properly to be classed as one of the 
specialized departments of productive labor. If so. It 
would be under the name of Accountance, as a part of 
Superintendence. But such classification, as was noted on 
page 26, can include only shop-order, shop-cost, stock-list 
or similar accountance. That Is, the Central Office of the 
Factory Proper, engaged In supervising exchanges within 
the producing organization alone, must be kept distinct 
from the Central Office of the Business, which Is engaged 
In supervising and promoting exchanges with the outside 
world, — although they often occupy the same room and 
absorb portions of the efforts of the same Individuals. 

It is next to be noticed that Into the activities of this 



58 THE COST OF COMPETITION 

entire productive organization no individual legal owner- 
ship enters. Not a man in the factory, from doughboy 
to superintendent, legally or nominally owns a bit of the 
work which he is striving to perfect or the tools with which 
he works. Every one of them receives his income in the 
form of wages. He works absolutely without any sense 
of proprietorship. He knows no " mine " or '' thine '' 
until payday arrives at the end of the week. Then, and 
not before, he is free to enjoy, as his own, the value which 
he has actually produced by his past efforts and which now 
lies, inseparably amalgamated with that of a thousand 
other cooperative workmen, dissolved and invisible within 
the fruit of their common toil. 

This absence of legal ownership or of sense of personal 
possession applies to almost every step in the entire modern 
productive system. Each man works for wages, not for 
the sake of making things for his own gratification. Here 
and there is a small factory which is superintended, more 
or less, by its owner; there are even still some where work- 
man and proprietor are identical; but they are small in 
size, unimportant in number and character when compared 
with the more fully developed productive enterprises, and 
they are on the steady decrease. They are comparatively 
unprofitable. They belong to a past age and are slowly 
but steadily falling into disuse, to give place to their now 
adult offspring, who do the bulk of the world's work and 
give to modern industrial society its characteristic ear- 
marks : the factories devoid of personal ownership. 

For in the truly modern affair the owners are cornpletely 
absented from the productive processes. They neither 
know nor care what is going on, except as it is visible in 
the results. They hire an able superintendent, pay him 
several thousand a year of wages, and expect him to prove 
that the value he produces is greater than that. If he 



EXCHANGE 59 

does not, he either receives less in the future or else he 
changes his occupation. 

Even in those cases where the owner Is present and 
spends a portion of his time In superintending the produc- 
tive processes of his mill (as contrasted with the commer- 
cial processes of his selling-office), this distinction must 
ever be kept clear : That during that portion of his time 
he is a superintendent, and not an owner. The portion 
of his Income which Is creditable to this portion of his 
time, equal to the value produced by that portion of his 
services, should be charged against the enterprise and 
credited to him as a salary for superintendence. In 
economic parlance it would be known as wages. The 
remainder of his Income, usually the far greater portion, 
Is to be credited to him on the score of ownership of 
capital or for business management, to be classified prop- 
erly later In the analysis. The one set of persons, too, 
to whom the message of this analysis is both specially 
addressed and especially Important, are these same manu- 
facturers and business-men of duplex activities. 



Classification by Activities, Not by Individuals 

Therefore, In considering the limits of the system prop- 
erly to be defined as the Productive Organization, 
throughout all of which exchange Is effected In the free 
and cooperative manner already described, they should 
never be expected to be found coincident with the limits 
demarking certain classes of people. They coincide, on 
the other hand, with the limits demarking certain classes 
of action. As a great many, though not the majority of, 
individuals divide their time between several quite dis- 
tinct sorts of activities, they thereby find themselves prop- 



6o THE COST OF COMPETITION 

erly classified, at one hour or another, in as many quite 
distinct departments of economic society. Just as, in 
other walks of life, a man may be, at different times within 
a year or a week, a Sunday-school superintendent and a 
thief, or a philanthropist and a careless distributer of 
typhoid-germs throughout his community, so, in the 
economic fields of action, a man may within a single hour 
compass activities so opposite In their effect upon the com- 
munity as to constitute him a veritable Dr. Jekyl and Mr. 
Hyde. He may, and often does, occupy himself at one 
hour with work the unconscious undoing of which absorbs 
his next; and yet he and the public, looking too closely 
only at what is visible In him, the Individual, and his 
immediate task, may be quite unconscious of the change 
and of the contrast. Indeed, It Is the main underlying 
object of this analysis to draw the mind of the reader, for 
awhile, away from the habitual plan of marking distinc- 
tions so uniformly between contrasting classes of persons 
and to substitute therefor, as the only safe guide In eco- 
nomic thought and action, the habit of drawing all fun- 
dajnental distinctions between contrasting classes of 
activity. 

For this purpose It Is worth while to spend a little time 
upon an Illustrative case. 

Let it be supposed that an industrious and upright 
dairyman is careless as to the cleanliness of his cows, his 
farm and his neighbors. Indeed, we may even suppose 
him to be of marked cleanliness of disposition, keeping 
his milk-cans well scoured and his farm-buildings neatly 
painted; yet let it be supposed, at the same time, that he 
is ignorant and bigoted In his mental attitudes, that he 
refuses to read even the most popular treatises upon the 
biology of disease-propagation and snorts In disgust at 
what he calls the modern fads of the scientific health- 



EXCHANGE 6i 

boards. It is quite imaginable, indeed, it is a common 
fact, that such a man may become at once a distributer of 
rich, attractive milk and of typhoid-germs. In the former 
capacity he is a producer of value and a public benefactor; 
in the latter he is a destroyer of human life and an enemy 
of mankind. 

These two activities, of natures the most contrasted, he 
maintains simultaneously. Of the excellence of the one 
he is justly, often intensely, proud. Of the very existence 
of the other he is unconscious. He is a malefactor upon 
a tremendous scale, not from evil disposition, nor from 
hasty temper in the face of provocation, nor from inherited 
weakness in the face of temptation, but from simple crass 
ignorance of the true nature of his everyday acts. If 
detected and arrested in his career by the keen eye of 
science and the strong arm of the law, his most natural 
feeling is one of injustice and of righteous indignation. 
Yet it is none the less true that the very existence of human 
society demands his suppression, not as an immoral indi- 
vidual nor as a producer and distributer of milk, but as 
a producer and distributer of death by typhoid. The 
only thing which will possibly accomplish this suppression 
is his education; and since he has rejected all opportuni- 
ties for voluntary education by more comfortable means, 
imprisonment or fine is imposed by force as the only known 
means of teaching him his lesson. 

It is particularly to be noted that the evil of the 
original situation excludes, on the part of the guilty indi- 
vidual, all question 

(a) Of morality or immorality of impulse, 

(b) Of individual consciousness or unconsciousness 
of guilt, or 

(c) Of public condemnation or approval of his acts; 
that is, the distribution of typhoid-germs was just as fatal 



62 THE COST OF COMPETITION 

before the health-boards discovered It and aroused public 
law and sentiment against It as it was afterwards. Such 
was the unalterable-, natural fact. 

It Is quite proper to Introduce at this point the Idea 
that the factories, offices and Individuals of our Industrial 
organization cover daily activities which, when closely 
examined, prove to be a composite of two or more very 
different sorts. Some of these activities are of the very 
greatest value to the community. Some are fraught with 
disease and death for the society and the individual. In 
the separation and the classification of these activities It Is 
worse than useless to attempt either to sort out the indi- 
viduals themselves, or their good or bad motives, or their 
good or bad consciences, or the approval or disapproval 
of the public. It Is safe and sane only to look to the 
nature of the moment's action and to the natural fact of 
its inevitable result. Should the conclusions which are 
forced upon us by such a method of analysis prove to be 
In wide disagreement with current public opinion, no more 
mysterious explanation is needed than the presence of 
widespread public ignorance of cause and effect In the 
field of economic energies. The very hopeful sequel to 
these conclusions Is that nothing more difficult of attain- 
ment is needed, in remedy, than education. The vastly 
more difficult task of widespread moral regeneration is 
eliminated. 

Pure Exchange and Exchange Alloyed with 
Barter. At this point in the analytical observation of 
modern productive methods Is reached a contrast so 
marked as to be, In the nature of affairs, exceedingly sur- 
prising were it not that past history explains Its origin. 
It appears that the absolute freedom and perfection of 
the system of exchange which has just been described as 



EXCHANGE 63 

characterizing the modern factory, and which has per- 
mitted that growth of specialization from which all 
modern opulence is sprung, is not in universal, nor even 
in major, adoption for all exchange. Exchange within 
the factory is universally carried on thus perfectly, it is 
true; but exchange without, usually from one factory to 
another, and always between factory and consumer, is 
carried on upon a totally different, indeed upon a quite 
opposite plan. Whereas within the factory occurs ex- 
change pure and simple: the interchange between two 
parties of the possession of an article for the sake of the 
addition of further value to it, in this second plan occurs 
exchange coupled with barter. In the first case the sole 
motive is the Value naturally inherent in Exchange (p. 
S^) ; in the second this motive becomes quite secondary. 

The first step in defining to the understanding these two 
methods of exchange so as to fully grasp their opposite 
characteristics would seem to be to draw the line demark- 
ing the two fields of their respective activities. But in 
attempting this some difficulty arises. It seems impossible 
to classify their territories of adoption according to any 
distinguishing characteristic, without or within. There 
does not appear to be any broad difference, either in time, 
place or manner of surrounding conditions, which deter- 
mines which of the two should be used in any given case. 

For instance, geographical distance of separation has 
nothing to do with it. Factories located in the most dis- 
tant states sometimes exchange upon the free, coopera- 
tive plan, thus constituting themselves separate depart- 
ments of a single enterprise; while factories existing side 
by side often rely upon exchange coupled with barter for 
the mutual intercourse whereby they cooperate in the final 
supply to the Consumer. Upon the other hand, both 
statements may be directly reversed and still be in truth. 



64 THE COST OF COMPETITION 

Again, size has nothing to do with It. Some of the 
largest factories cooperate with others equally large, 
though most of the large ones rely upon communication 
through the medium of barter. On the other hand, the 
size of the aggregations of labor which are commonly 
found cooperating in exchange without barter may range 
downwards to a single man each. 

Once more, character of work has nothing to do with 
it: tasks both very similar and very dissimilar exchange 
on either plan. Coal-mines or oil-refineries with rail- 
roads, street-railways with police-departments, coastwise 
navigation with inland copper-mining, illuminating-gas 
with federal legislation: these most opposite and Irrele- 
vant services all meet, in certain Instances, in this freely 
cooperative spirit. In other cases, services of the most 
intimately related and Interdependent character, such as 
the mail, the telegraph, the telephone and the railroad serv- 
ices, gas-making and the supply of electrical power, heat 
and light in cities, etc., not only do not exchange freely 
and cooperatively, but they refuse to try to do so, even 
when the obvious advantages to the community latent In 
the proposition are portrayed to them; and in this refusal 
they are frequently upheld alike by public opinion and by 
the law. 

When attention Is turned to the question of singleness 
of ownership of the tools utilized as a factor in deter- 
mining where barter shall be added to exchange and where 
not, there is temporary promise of a clew to an explana- 
tion; but it melts upon examination. Many of the larger 
enterprises owned by a single legal Individual exchange 
under barter; or at least they assert to the public, in the 
most indubitable terms, that they do. Enterprises owned 
by separate Individuals, on the other hand, by men of the 
most distant interests and characteristics^ are found upon 



EXCHANGE 65 

examination, or by accident, to be exchanging coopera- 
tively, under the methods known as pools, agreements, 
mergers, etc. There is no basis for accurate or satisfac- 
tory distinction between the two plans by reference to 
singleness of legal ownership. 

Wherever the line may actually be drawn, — and it can 
never be drawn in the same place upon two successive 
days, — certain it is that nothing determines it except the 
unwritten law of changeable public sentiment or the 
changeable written law of the statute-book. There is no 
rational nor natural nor absolute support back of the 
vacillating distinctions which are drawn between the use 
of the two methods. Enterprises, services and individ- 
uals which one week conduct themselves with the bit- 
terest mutual antagonism are found to be, on the follow- 
ing week, warmly cooperating. Individuals will trans- 
pose their mental attitude toward the two methods, from 
the most vigorous prosecution of barter to the most cor- 
dial support of cooperative exchange, or vice versa, in a 
day. A change of employment, or the sale of a mill or a 
business, will so metamorphose them. 

Wherefore must the searcher after accurate knowledge 
end this quest with the statement that the distinction 
drawn between these two widely contrasted methods is 
entirely haphazard in character: that it is not founded 
upon any principle, either geographical, mechanical, 
economic or religious. In the progress of events from the 
primitive past from which barter has been inherited it has 
happened, in the different lands, that different industries 
and different individuals have been first in being freed from 
its burden and left free to carry on their exchanges in the 
natural fashion. The others are still addicted to barter 
by habit or custom, or are compelled to it by law. Thus, 
in England it has been customary, at least to within a few 



66 THE COST OF COMPETITION 

years, for the gas-makers to exchange with the community 
of consumers of gas upon the free, cooperative plan, while 
the water-providers exchanged by barter. In America 
it is just the opposite : the water-service is usually operated 
cooperatively, while nearly all of the gas-suppliers barter 
with the community. 

For barter is not exchange. It is a process quite addi- 
tional to exchange. While it is commonly referred to as 
a method of effecting exchange, it will readily appear, upon 
thought, that the pure method of ef eating exchange is 
always present, even when barter is superimposed. The 
commodities change owners, using the term owners to 
include full temporary control for the purpose of addi- 
tion of value by further transformation; full account of 
the transaction is kept, by labor allotted to that task. 
That is the entire jurisdiction of Exchange. The process 
and its purpose is completed thereby. Every possible 
enhancement of Value of a commodity which can result 
from a change of hands, whether to the extent of mere 
temporary control or of permanent legal ownership, has 
been thus accomplished. 

On the other hand, both the process of barter and the 
objects which induce its undertaking are quite distinct from 
and additional to the above. It is altogether in the form 
of an appendage, wholly external to the productive pro- 
cesses of transformation, transportation and exchange, 
that barter is superimposed upon this last. So true is this 
that in most of the modern industrial enterprises exchange 
is carried on by one set of individuals: the shop-superin- 
tendents, order-clerks, shipping-clerks, stock-clerks, etc., 
all salaried or wage-paid individuals, while the barter is 
carried on by a quite distinct organization: of owners, 
officials, salesmen, commercial travelers and advertising- 
agents, with their assistants, the stenographers, printers, 



EXCHANGE 67 

etc. But whether this separate organization exists or not, 
the activities are none the less separate and distinct, even 
opposite, in their nature and In their effects. Indeed, the 
effects of the two sorts of activities are much more 
strongly contrasted than possibly can be the personal 
characteristics of the two sets of people, even when sep- 
arate. The task of bringing clearly before the reader this 
fundamental contrast must be reserved to the following 
chapter upon Barter. Before turning to it, however, it 
will be well to review and summarize what has already 
been established. 

Summary. The word Production, now capable of 
being given a more detailed significance, will be used here- 
after to cover broadly the processes and the organization 
now completely outlined as consisting of: 

(i) The Transformation of material more or less 
raw Into some other form of greater value for consump- 
tion by and the support of human life; 

(2) Its Transformation, either between persons en- 
gaged In the above processes or between the last one in 
their series and the actual Consumer, who absorbs and 
destroys the article In support of his life or growth; 

(3) Its Exchange between any of the parties listed in 
the two previous paragraphs. 

The table displayed upon page 28 may be taken as the 
amplification of any one of these three paragraphs, or of 
all three combined. 

This definition includes all superintendence and all 
accountance necessarily Incidental to the processes defined. 
It excludes, on the other hand, 

{a) All transportation which does not enhance the 
consumptive value of the article transported by altering 
its natural environment to one more favorable to con- 
sumption ; ' 



68 THE COST OF COMPETITION 

(b) All superintendence not engaged in directing the 
actual handling, transforming and transporting of the 
goods, or engaged in unnecessary, valueless transportation 
or transformation; and 

(c) All accountance accessory to such unproductive 
effort. 

This is Production. This alone produces what we Con- 
sume. All other activities of the body economic are 
external thereto. Their definition and discussion, in the 
chapters which are to follow, will much augment, by light 
from the opposite side, the clarity of the definition which 
has thus been finally accomplished. But it is the object 
of the chapters preliminary to this point to make clear to 
the reader that this is indeed Production, the only set of 
processes possibly to be defined by that name ; that, as thus 
defined, absolutely every iota of value now existent, every 
material particle capable of supporting human life or 
growth, is now actually produced, completely , from the 
original mines, fields, forests and sea to the time and place 
of actual consumption in the support or elevation of human 
life, by these processes thus listed under the name of Pro- 
duction, AND BY NONE OTHERS. 



« 



V 
BARTER 

THE office of barter, as an accessory to exchange, 
is the determination of the Valuation to be as- 
signed to the Values exchanged. 

Valuation, it will be remembered, is the psychic atti- 
tude of an Individual toward a given Value. Whereas 
value is a natural fact, measurable in terms of the life 
springing from it, valuation is a quite independent vari- 
able, sometimes greater and sometimes smaller than the 
value with which it is associated. Whereas the biologic 
equilibrium of life, dependent as it is upon the value 
which supports it, always brings us back, sooner or later, 
more or less closely, to a truer estimation of values, yet 
temporarily such estimation or valuation may wander far 
astray from the truth. 

The plan at present relied upon for its determination 
and limitation is Barter. Not that we know of no other 
way. Vast volumes of exchange are carried on, con- 
tinuously and stably, without any aid from barter what- 
ever. The central office of a factory, for instance, seldom 
has any difficulty in determining the valuations needed 
when the foundry exchanges with the machine-shop; yet 
these valuations are true and natural, not artificial ones, 
determined solely by volume and intensity of supply and 
demand. Although not equal to, they are closely and 
accurately proportional to, the true values. Very little, 
if any, labor-difficulty based upon internecine jealousy 

69 



70 THE COST OF COMPETITION 

over such valuations is reported. Yet no barter between 
the two departments party to the exchange occurs. The 
foundry does not appoint an agent who shall bargain for 
its workmen with the agent of the pattern-shop and the 
agent of the machine-shop over the price at which rough 
castings shall be entered against finished ones in the books 
of the central office, or over the price at which molders' 
time shall be charged as compared with machinists' time; 
nor do the inevitable accessories of such a policy: the 
advertising, the drummers, the restriction of output, the 
retention of legal counsel, etc., etc., characterize the rela- 
tions between the several departments. Such a policy 
would not for one instant be permitted by the factory- 
manager. As a gross Interference with the efficiency of 
production, the parties attempting it would be immediately 
excused from all further participation In the service and 
the pay. The internal reciprocations of the factory, in 
Its present standard form, consist of pure and simple 
economic exchange, and not the slightest difficulty In keep- 
ing It so arises from the frailties of human nature. In 
outside transactions barter exists. In fact, solely because 
it was used in the remote and barbarous past and because 
we have not yet finished with Its abolition. Every step 
in the growth of that factory-system which has so Indelibly 
characterized the history of the past two centuries has 
consisted of the gradual elimination of barter from 
exchange during specialized production. Indeed, the 
phenomenal expansion of productivity and reduction of 
productive costs during the past century Is due much more 
to this process than to any advance In purely technical 
methods and devices. The process of its elimination is 
merely not yet finished. If Its elimination from exchange 
between producer and consumer and between capitalist 
and laborer had been equally steady, rapid and thorough. 



BARTER 71 

there is little chance that this book would ever have needed 
to be written. 

Barter Is best defined by Illustration, and for this pur- 
pose the exchanging communities of fishermen and 
hunters will serve excellently well. In order to make the 
simile as close as possible to the probably historical order 
of events, let it be supposed that the tribes of fishermen 
and hunters originally existed in a state of perpetual 
savage warfare. This would narrowly limit the activities 
of both parties, both geographically and as to liberty for 
specialization. Those living on the shore would find their 
food In the sea ; nor could they search for a wider diet for 
fear of the warlike hunters of the hills. Those living 
inland subsisted upon game or upon their flocks, never 
thinking of communication with other tribes except for 
the sake of plunder or rapine. The result would be in 
each case a narrow limitation of the possibilities of life, 
•practically as narrow as if no other tribe existed. 

Under these conditions exchange would enter as one of 
the rewards of peace. Barter, or the exchange between 
individuals upon a basis of price to be settled solely by 
themselves, demands, as a preessential to Its existence, 
comparative physical peace between the negotiating par- 
ties, amounting to a truce, at least. Lacking this, it ceases 
to be barter and becomes robbery. But the difference 
between the two lies in this alone, and not at all in the 
question of moderation or exorbitance of price exacted. 

But economically speaking, peace would constitute 
merely an amalgamation of the two tribes Into a single 
community, scattered geographically and divided politi- 
cally, to be sure, but one in their common interests In the 
securing of diversified wealth. So far as economics Is 
concerned, the segregation of the separate services or 
Industries might consist of their allotment to separate 



72 THE COST OF COMPETITION 

tribes, or merely to separate trades in a single tribe. Politi- 
cally the difference might be great; economically it would 
be nil. 

Under such peaceful conditions, therefore, when game 
is brought to the seashore or fish to the hills for the pur- 
poses of exchange there arises immediately a question as 
to price. The true value of the goods submitted is 
unknown. The savage intellect has acquired no biolog- 
ical laboratories, nor statistical bureaus for its determina- 
tion. So would be brought into play, in their stead, 
barter as to valuation. 

Here, again, would trouble arise. The community of 
savages has no means for determining even the average 
valuation of the goods by the community; it does not 
possess sufficiently intelligent organization to perceive 
things as a unit. It has, in short, no Central Office. 
Therefore is recourse necessarily taken, purely as a matter 
of primitive ignorance, to individual valuation as a deter- 
minant of price, and the exchange is made upon that basis. 
The parties are left strictly to themselves. Interference 
in their little duello of bargaining-abilities is held to be as 
dishonorable and reprehensible as is interference in any 
other sort of duello. 

Thus arose the " free social contract." As civilization 
advanced it has been found necessary to Interfere, to the 
extent of prohibition, with every other sort of duello. 
With barter the interference has as yet been only partial. 

The price thus determined upon would not, of course, 
be coincident with the valuation of the goods by either 
party to the exchange. It would be in the nature of a 
mean between the two. When the price were determined 
as the result of merely a single negotiation, between two 
parties only, it possesses no outside effectiveness. When 
it was the result, more or less indirectly, of a large number 



BARTER 73 

of such negotiations it would become a market-price. 
These considerations lead to the following definitions: 

Price is the 'nearest available measure of individual 
valuation. Market-price is the similar measure of 
average valuation. Prices paid by individuals may 
depart considerably from the market-price. 

Price is not an exact measure of valuation because the 
valuation may exceed the price paid, or be less than the 
price accepted, by a considerable proportion without being 
evident in any alteration of the visible price from the mar- 
ket standard. In fact, the primary requisite for exchange 
is that the purchaser's valuation of the article must exceed 
the price asked before purchase can be made; the seller's 
valuation must be less than the price offered before a sale 
can be effected. It is difference in valuation which over- 
comes the natural resistance to exchange, just as differ- 
ence in head overcomes the resistance to flow of water or 
difference in temperature the resistance to flow of heat. 

Price is merely a mean ratio of the two valuations of 
the two respective commodities on the part of the two 
parties to the exchange : the number of fish which shall be 
exchanged for a haunch of venison, for instance, or vice 
versa. When price is stated in terms of money it 
expresses the relation of the valuation of each article In 
question to that of another commodity, usually gold, 
which is chosen as a standard of reference. We thus have 
no absolute measure of valuation. 

Barter. It Is clear that the price obtained in exchange 
coupled with barter, for each commodity respectively in 
terms of the other, for game in terms of fish or for fish 
in terms of game, depends upon the balance of power 
between two pairs of factors, one pair on each of the two 
sides of the bargain: 



74 THE COST OF COMPETITION 

(i) Between the individual productivities of the two 
parties to the bargain; that is, the amount of game or fish 
brought to market by each laborer as the result of a given 
amount of labor. The equation between these two forces 
results in the natural price, or the equation of pure value. 

In such an isolated case as a single bargain, irrespec- 
tive of market averages, the value might not properly be 
called pure. It would have to be assumed that the rela- 
tion between productivity and cost of supporting life is 
the same in these individuals as in the average of the com- 
munity. The only thing necessary to make the statement 
true, therefore, is to expand the factors resting upon 
individual productivity into others resting upon the 
average productivity of the community. This is the pro- 
cess relied upon in all the cooperative exchanges between 
the various departments which enter into the modern fac- 
tory-system; they are all based upon the natural price of 
the work done in the several departments, each in terms 
of the others. 

(2) Between the comparative abilities of the two par- 
ties, respectively, to force the price accepted by the other 
away from this natural price, by driving a good bargain. 
It is this equation of forces which alone constitutes barter. 

The natural price is the result of perfectly free 
exchange, under a peaceful and equitable equation of the 
comparative productivities and the comparative values. 
Such exchange permits specialization and coordination 
and is productive of value. It and its price are therefore 
legitimate and essential features of a modern system of 
production. 

The barter-price, on the other hand, is the result of the 
modification of free exchange by barter, by forces quite 
aside from those determining the natural price. Their 
nature and their fruits belong quite outside the field of 



BARTER 75 

production, which Is complete In the combination of labor 
with free exchange, and are to be determined only by 
more extended Investigation. 

The process of barter Is properly divisible into two 
subdivisions : 

(a) The alteration, by one of the two parties to the 
exchange, of the other's valuation of his own portion of 
value offered In market, by persuasion or by deception as 
to the natural price ; In which case the victim Is unconscious 
of the wrong being perpetrated upon him In the diversion 
of the price away from the true and natural one. 

(b) The forcing, by the one, of the price accepted 
by the other away from the latter's valuation of his goods 
and toward his own valuation, either by utilizing an 
environment which places the other under the duress of a 
painful alternative if he refuses to exchange, or by 
coercion through fear of the same, even though It be not 
Imminent; In which case the victim Is conscious, but help- 
less, either from his own weakness or from the disadvan- 
tages of his environment. 

As stated above, the natural price of an article Is a 
function of comparative Individual productivities and can 
be affected only by the education of the producer, by the 
discovery of new supplies of raw material or by the inven- 
tion of new machines or methods of production. It Is 
toward these goals that all education, all Sicience and all 
invention are directed. But as they affect equally. In the 
end, almost all commodities produced, and all Individuals 
composing the laboring body, they naturally have little 
effect upon the natural price, even temporarily. Now and 
then some exceptional step in advance places one com- 
modity or another, some worker or another, temporarily 
In advantage. But as the higher price of the commodi- 
ties, or the lower price of the labor thus left temporarily 



76 THE COST OF COMPETITION 

in the rear offers an exceptional inducement to them to 
ameliorate their condition, to which they must sooner or 
later respond, there results the following inevitable law of 
equilibrium : 

Neither improvements in the arts or sciences nor any 
advance in the average of general or technical intelligence 
of labor tends to permanently alter the natural price of 
exchange between any two staple commodities, or between 
any two staple classes of productive labor. 

New commodities, of course, are continually entering 
the field, through discovery or invention. They enter 
fairly gradually, and while they are doing so this law will 
obviously not apply. But once the novelty of their manu- 
facture is gone and they are fully established as staple 
products of the community, the above holds true of them. 

In order to correctly understand barter, further analysis 
of its detail is necessary. Let it be supposed^ for illustra- 
tion, that a single hunter should meet a single fisherman, 
each laden with the fruits of his trade and each anxious 
to exchange a portion of it with the other, in order to 
obtain a greater diversity of diet. Their trysting-place, 
whether by the shore or inland, is the market. To it is 
brought fish and game, cleaned and ready for the spit. 
Production, including transportation, is already complete. 
Except for the final transportation to the family-table, or 
the savage substitute therefor, each commodity is ready 
for final consumption in the support of life; and this, it 
will be supposed for the present, is the sole object of the 
exchange, as it was of the productive effort preliminary 
thereto. Except for the difficulty as to the unknown com- 
parative valuation, or price, there is no reason why each 
should not pick up his proper share of the other's things 
and return home. ' If so, no effort, either muscular or 



BARIER 77 

nervous, would have been expended in any other way 
than In production, including the necessary transportation. 
To adjust this matter of valuation, however, — as a 
method of solution of a purely intellectual question, — 
enters barter. 

In this process each party sees promptly his opportunity 
to increase his wealth otherwise than by producing it. 
To illustrate, let it be supposed that, in the then existing 
stage of existence, a day's labor on the part of the average 
savage would secure ten hares, or thirty fish, and that 
either of these same quantities of food would support for 
one day the average family of such a size as would, in the 
long run, keep the population stationary. It is only under 
stationary conditions of growth of all sorts, in wealth and 
refinement as well as in population, that an average day's 
labor produces only an average day's consumption. For 
simplicity's sake it is now to be supposed that such is the 
case. But whether this be so or not, values produced are 
always to be measured by their power to support life as 
they are consumed, and not by the amount of life absorbed 
in producing them.^ Therefore, the natural price of one 
hare is three fish, because it is in that proportion that they 
will equally support the savage race. 

1 Herein lies the error of the economic philosophy of Marx. He takes 
the day's labor as the fundamental unit of measurement, disregarding the 
question as to whether that effort be wisely or unwisely directed, toward or 
away from the best needs of the community. By accepting the life-sup- 
porting power as the basic measure of value this error is avoided. Just 
what sort of life is to be considered the most valuable, — for there are, of 
course, many sorts, requiring as many different grades of supplies for their 
maintenance, — is not a question of economics at all, but of ethics. These 
questions must be settled entirely outside the field of economics, by the 
standards of taste, religion and philosophy which prevail at the time. 
Once thus settled and incorporated into public opinion, it is the business 
of economics to supply life's material needs. The extent to which it per- 
forms this task is the standard to which all measurements within its 
borders must be referred. 



78 THE COST OF COMPETITION 

If the savage community had had sufficient intelligence 
and patriotism to establish, by mere statistical record, the 
natural price between fish and hares, and to publish this 
fact from day to day or month to month, enforcing it as 
we now enforce fixed street-car fares, hack-fares, postal 
charges and tax-rates, all would have been simple. But it 
did not. Therefore, the question as to how many fish the 
hunter was to get for each hare, or how many hares the 
fisherman was to carry home as the result of his day's fish- 
ing, remained wide open. 

This fundamental fact is to be noted at the start, to be 
reiterated and emphasized at every possible point: Pro- 
duction was already finished and could not be extended by 
any sort of further effort. There lay the game and the 
fish on the market. No further effort could or did pre- 
tend to increase their number, their weight or their life- 
supporting value in any way. Each man possessed at the 
start an equal amount of nutriment in his stock of pro- 
visions. By exchanging half of it for half of the other 
fellow's, each would still have the same amount of nutri- 
ment, capable of supporting the same amount of animal 
life; only, by its twofold diversity, it would then be able 
to support a higher quality of life than before. But this 
gain is accomplished by Exchange pure and simple. Bar- 
ter, coming additionally to this process, aims at a quite 
different sort of gain. 

For the total quantity of life-supporting nutriment 
owned by the two parties cannot be, and is not honestly 
pretended to be, altered by barter. It is the proportion- 
ate distribution of wealth between the two parties alone 
which barter aims to influence and to modify. For, as the 
result of exchange alone, at the natural price, each man 
would depart from market with five hares and fifteen fish. 
But In barter each sees his opportunity, as stated before, 



BARTER 79 

to secure wealth without producing it; the only way, of 
course, being to get away from the other fellow some of 
the wealth which the latter has produced. If the hunter, 
for instance, by persuasion or deception as to the quality 
of either of the commodities or as to their natural price, 
or by securing a time for exchange when the fisherman is 
in especial need of game, or by selecting a place where 
violence may be threatened without danger of punish- 
ment by the tribe, or by the promise of influence with a 
sweetheart, a chieftain or an enemy, — if by any such 
means he can force his neighbor to accept one hare for 
four fish instead of one for three, then, as the result of 
the barter, the hunter will depart from market with five 
hares and twenty fish and the fisherman will return home 
with live hares and only ten fish, — to what domestic fate 
we may leave to the imagination. 

As the net result of the day's efforts, therefore, the 
hunter has produced five hares and fifteen fish by produc- 
tive effort (hunting, transportation and exchange) and 
has also acquired five fish by barter; the fisherman has 
produced five hares and fifteen fish by productive effort 
(fishing, transportation and exchange) and has lost five 
fish by barter. 

Price-tendency under Barter. Herein arises the 
second important characteristic of the situation: If the 
fisherman finds life more endurable upon a daily diet of 
five hares and ten fish than he did upon thirty fish alone, 
he will return to the market on the morrow, to be again 
outdone by the hunter at barter; if not, he will remain 
away until the hunter becomes more moderate in his 
demands. If, on the other hand, life would be more 
enjoyable for the fisherman even upon so low a diet as 
five hares and only five fish than it would upon thirty fish 
alone, and if the limits of either the hunter's seductive or 



8o THE COST OF COMPETITION 

overbearing disposition or of his command of intrigue 
have not yet been reached, these processes will most 
naturally be expanded until the hunter's daily income has 
become five hares and twenty-five fish, while the fisher- 
man's is reduced to five hares and five fish. For this is the 
line of least resistance. It is easier and, to dispositions 
fitted for it, pleasanter to barter than to produce. To 
produce means effort sustained over a period proportional 
to the value acquired. To bargain successfully is to miain- 
tain the proper attitude for a few minutes only; the effort 
being not at all proportional to the reward, whether five 
fish or ten, but to the difference between the comparative 
personalities and advantages of the two contending 
parties. 

From these considerations Is established this law: 
Barter added to Exchange inevitably tends to directly 
reduce the income of the loser to the minimum which 
leaves life at all preferable to the more primitive level of 
existence without exchange. 

Barter a Negative of Productivity. Such would be 
the intercourse between hunter and fisherman if the 
latter were a quiet, unaggressive Individual, devoted to 
his day's work and knowing little and caring less about 
diplomacy, intrigue or antagonism — as, most fortunately, 
is true of the majority of mankind. But let it be sup- 
posed, on the other hand, that the fisherman who greeted 
the hunter turned out to be one of his own ilk, matching 
him evenly in ability to barter. Then would result two 
things : 

( 1 ) Each would return home, on the average, after 
all their dickering, with the five hares and fifteen fish 
which each would have had had they exchanged without 
any barter at all', that Is, at the natural price. 

(2) The natural hope of being able to effect a better 



BARTER 8 1 

result than this, legitimately supported by the very high 
reward allotted to barter, per unit of time, when it is suc- 
cessful at all, would lead to their spending more and more 
time each day at bargaining with each other, until the 
time devoted to production became so restricted that the 
quantities of fish and game brought to market no longer 
tempted quarrel over them. This hope of quicker and 
easier success by barter than by production is the gambler's 
hope. It is seen to bring the gambler's reward. 

From this second consideration arises the law: Barter 
added to Exchange inevitably tends to restrict the pro- 
ductivity of both parties to the barter to the minimum 
which leaves existence at all preferable to the more primi- 
tive level attainable without exchange. 

Barter a Parasite. Combining these two laws, there 
results this all-important conclusion: Barter is a pro- 
cess parasitical upon Exchange so destructive to the 
latter and, with it, to the Production dependent upon 
exchange, and to the Life engaged in both and dependent 
upon them for support, that it limits their existence and 
activity to the minimum which will afford a supporting 
food-supply to the barter which preys upon them. This 
minimum is slightly greater than the productivity possible 
without either exchange or barter, hut is vastly less than 
that possible with pure exchange alone. 

That is to say, given a certain field for exchange, a 
field of value-production potential for a certain degree 
of expansion by the advent of exchange, and the presence 
of barter entering with the exchange will permit the latter 
to enter and to grow only to that degree which barely 
constitutes progress at all (else would no entrance take 
place) and which leaves the maximum portion of the 
latent potentiality for growth-support absorbed by unpro- 
ductive effort at barter. 



82 THE COST OF COMPETITION 

Barter an Evil in Two Distinct Directions. In 

these fundamental characteristics of barter which have 
just been noted there lie visible in embryo two very dis- 
tinct wrongs, both of which are inherent in the nature of 
the institution. Both of these must inevitably rise and 
grow, under political and geographic freedom, to the 
greatest extent tolerable by society, wherever prices are 
largely left open to settlement by individuals, independently 
of natural law and public responsibility. These two are : 

(a) The wrong done the individual less capable as a 
barterer (although capable as a producer to any imagin- 
able degree) by the extraction from him, by force of will 
or circumstance, of a portion of what he has already 
produced; 

(b) The wrong done to the community, in the consump- 
tion of time and nervous energy in useless, because non- 
productive, barter and visible in the decreased supply and 
the enhanced market-price of the commodity in question. 

The first of these is plainly visible in the elementary 
illustration. In modern times it has very greatly increased 
in magnitude, by the exaggeration of the unbalance 
between the contending parties far beyond what it could 
be between any two individuals, by the combination of 
individuals on the selling side with no corresponding com- 
bination on the buying side against it. It is this which is 
the foundation of all of the current outcry against " the 
trusts." But in this the wrong has grown only in magni- 
tude, not in character. 

The second of these two wrongs is by no means so 
easily discernible. In the elementary illustration it is 
obscure partly because of the deliberately assumed lack of 
any coherent social entity which might be palpably 
wronged by the mere existence of the barter, and partly 
because of the obvious freedom of other individuals, in 



BARTER 83 

so elastic an environment as this elementary society, to 
operate quite independently of the haggling pair. In 
modern society both of these conditions are absent. 
Society is a unit, whether it will own up to It or not; the 
Institutions adopted by the majority, which never sees 
clearly what It Is doing, must be accepted by the minority. 
In its modern development, however, this second form of 
wrong Is still obscure, not because It is small or unimpor- 
tant but because of the blinding intricacy of the field in 
which it Is active. 

Yet Is it most important to call attention at this point 
to the fact that It is this second form of offense Involved 
in barter, the one against society at large, which now con- 
stitutes by far its most Important phase. It has not only 
grown enormously . In magnitude, but its ramifications 
have worked their Insidious way throughout the social 
structure until the entire fabric of individuals and Institu- 
tions, material, intellectual and moral, has been permeated 
and distorted by its poisonous presence. The victim 
suffers, as does one with gout or leprosy, knowing only 
the pain but not the cause. So complex Is the medium 
through which this offense Is committed, so multiplex is 
the community-victim Itself which suffers from it, that it 
will take the remainder of these pages to properly Identify 
the crime and indict the offending Institution. Yet Is it 
Important to state here most emphatically that It is not 
the direct crime of violence operative against the individ- 
ual, in barter, which causes the most suffering; It Is the 
crime of passive error operative against the community 
which makes to-day the problem of the future existence 
of society an appalling one. It Is not the profit-making, 
the profit which Is extorted from the consumer, which 
does him the most harm; It is the profit-seeking, the time 
spent by the barterer in antagonism and failure, which 



84 IHE COST OF COMPETITION 

undermines his neighbor's purchasing-power and which 
robs the rich and the poor alike of their natural heritage 
in a new continent: material welfare, peace on earth and 
good will to men. It is not gold, but the legalized strife 
for gold, which is the root of all evil. 

In spite of the wide contrast in superficial appearance 
between our simple illustrative case of the hunter and the 
fisherman, offered to aid in the clear definition of the 
terms used, and the complexities of modern industry, it is 
to be especially urged that it supplies complete proof for 
these propositions in their utmost application. The dif- 
ference is solely one of degree, not of kind. It cannot, 
however, furnish a complete understanding of their 
breadth and depth. That will finally be found in the 
corroborative way in which every more complex appear- 
ance of these processes in actual economics develops these 
same resultant symptoms. Of these symptoms the fol- 
lowing pages will present what are possible within the 
purposed scope of this work. But to the thorough 
student the real proofs are to be found in the myriad of 
items of news of current economic life which reach us 
through the medium of the daily and weekly press, as 
well as in the various statistical reports of the scientific 
and governmental bodies. Interpreted in terms of these 
simple illustrations they will be found to be identical with 
them, except that they are become very much more com- 
plex and intricate in form by the interlacing with them 
of the many extraneous factors of life which have here 
been properly eliminated and by the mere multiplication 
of individual parts. 

Internal Barter. Before going any further into the 
detailed characteristics of barter there must be identi- 
fied to the reader another sort of barter, not commonly 



BARTER 85 

known by that name nor superficially resembling this first 
form, but which Is nevertheless quite Identical with it In 
the nature of Its efforts, of Its reaction upon the Individuals 
exerting It and of Its results to the community. Thus 
far has been considered the phenomena arising from 
barter within merely a single pair of Individuals, members 
from each tribe or trade respectively. The situation now 
needs expansion until each tribe shall enter Into the pro- 
cess In Its entirety. 

Let It be Imagined that the community of fishers have 
been for a long time without meat. Fish are plenty, but 
no game Is to be had. Finally there appears upon the 
scene a hunter with a hare upon his back, willing to trade 
for fish. As the hare will not cover more than one table, 
there arises Immediately the question: Who amongst 
the fishermen shall have the privilege of exchange? 

For the purposes of illustration, it will be assumed that 
the hunter Is a close-mouthed fellow, who holds himself 
silently aloof from negotiation until the rabble of con- 
tending fishermen shall have settled this question among 
them. For the time, therefore, his personality does not 
enter the question. It Is also to be assumed that the desire 
for game is equally Intense on the part of all the fisher- 
men. But this Is assumed for simplicity's sake only; dif- 
ference between the fishermen in taste for game would not 
affect the situation except to confine the final competition 
for the privilege of exchange to a portion, instead of to 
all, of the fishermen. 

Into the settlement of this question. Who among them 
Is to have the privilege ? the two factors already mentioned 
will enter: 

(i) The comparative productivity of each individual 
fisherman ; that Is to say, which one can display the largest 
pile of fish as the result of the day's labor. 



86 THE COST OF COMPETITION 

(2) The comparative skill of the several fishermen in 
attracting the attention of the hunter and in persuading or 
deceiving him into the belief that this one's fish are better 
and his neighbor's are worse; or in driving his neighbors 
by threats into the background, — thus decreasing the pro- 
duction of fish, so far as visibility in that market is con- 
cerned; or, it might possibly be, in skill and judgment in 
offering a good price for the hare to-day in the certainty 
that by the morrow it could be re-sold to present competi- 
tors for a better price than they were now willing to give. 

This wrangle among the fishermen must be imagined 
as completely settled before the hunter comes into con- 
sideration at all. The question being settled amongst 
them is not: What price shall we get for our fish? but: 
Who among us is to have the privilege of exchange with 
the hunter at all? This privilege stands to the struggle 
between the several fishermen exactly as the extra five or 
ten fish to be had by barter did to the struggle between 
the single fisherman and the hunter. There is oppor- 
tunity for only one to exchange. If one gets it the others 
must lose it. The struggle does not in any way hope to 
increase the opportunity for exchange, which amounts to 
one hare, no more, no less. It does not aim at determin- 
ing the rightful owner of the privilege; that would be 
properly settled by record of the fish brought to market 
each day by each individual: the natural price of that 
individual, so to speak, in the face of the coveted privilege 
of exchange. It is purely a struggle initiated by the most 
selfish to reserve this privilege each to himself, by its re- 
moval away from the individual excelling in productive 
skill or energy, whose natural price for the privilege would 
be the highest, to the individual who excels in ability to 
barter. 

In the case of each sort of barter: that between the 



BARTER 87 

solitary hunter and fisherman and that among the several 
fishermen, the question raised and settled is one of identity 
of ownership, not of total quantity of goods. It is one 
of specific or relative valuation, not one of absolute value. 
If there be more of value on one side .of the parley than 
there were in the first place, as the result of skill in barter, 
there will be less on the other. 

The Double Nature of Commercial Success. 

Success in either sort of contest may be forwarded by 
superiority in either one of two fields : In production or in 
bargaining. In the first field will arise a natural, whole- 
some desire on the part of each healthy worker to surpass 
his fellows: selfish, if you please, but nevertheless con- 
ducive to greater wealth in the community and to greater 
health and wealth for the individual. In the second field 
will also naturally arise a similar desire for personal 
superiority; but that it is unwholesome for both Individual 
and community in its results and quite in contrast to the 
first it is the task of these following pages to demonstrate. 
This desire, evinced in the field of production, we shall 
call emulation. That in the second field we shall call 
either barter or bargaining or competition, almost synony- 
mously. So far as all economic and ethical characteristics 
and results are concerned the latter three terms are exactly 
synonymous; the laws stated in terms of one are equally 
true of the other. The only distinction to be made in any 
event is a minor one of form, as already brought out. But 
as a single term Is much needed which shall serve to cover, 
in blanket-fashion, all effort of this character within the 
community, this minor distinction of form will be 
neglected and the term competition will be used to include 
all three, and as contrasted with emulation. Indeed, one 
of the prime objects In so doing is to bring home to the 
reader the clear Impression that all activity of this nature^ 



88 THE COST OF COMPETITION 

no matter In what walk of life it may occur, or with what 
tools or aims, or whether with consciousness of its evil 
fruits or otherwise, carries with it inevitably the concomit- 
ants and results here to be broadly ascribed to it. 

In the case of both emulation and competition the In- 
stinctive individual impulse to surpass and succeed Is 
natural. Physiologically they are identical. The economic 
results of the two, however, are as opposite as the 
antipodes. 

Because these words emulation and competition have 
never before been contrasted, to the author's knowledge, 
nor used with any technical significance equally exact with 
that assigned to them here, and because It is the prime 
object of this entire volume to draw out their contrast and 
significance, a separate chapter will be devoted to their 
definition and discussion. 



VI 
EMULATION AND COMPETITION 

THE word competition, as defined by the diction- 
aries, is practically synonymous with the words 
emulation and rivalry. The modern use of the 
word, however, in its commercial connections, has come 
to have so widely different, so distinct, so very antithetical, 
a meaning from these former synonyms that it seems need- 
ful to write this book to call attention to the fact. For 
the purposes of this volume, therefore, the two main ideas 
which we have already begun to contrast, in their economic 
aspect, under the terms Production, on the one hand, and 
Barter or Bargaining, on the other, will be considered in 
further distinction, in their ethical aspect, under the names 
of Emulation and Competition.^ 

Emulation. Every activity of man calls for a cor- 
responding psychic impulse, to stand sponsor as its cause. 
In the case of activity directed toward the production of 
value, this impulse may be any one, or all together, of 
three quite distinct ones. In the first place may come 
desire, the relation between the man and the thing which 
he hopes to enjoy, when produced, in consumption. In 
the second place may come initiative, the wholly self-con- 
tained and instinctive impulse which arises within the 
individual from a surplus of muscular, mental or nervous 
energy. In the third place comes emulation, the impulse 

1 The word rivalry is excluded, as possessing romantic associations 
which unfit it for the cold-blooded work of economic analysis. 

89 



90 THE COST OF COMPETITION 

which depends solely upon the individual's association with 
other individuals engaged In the same line of work. Since 
this discussion concerns only questions of the economic 
relations existing between man and man, cognizance will 
be taken here only of the last-named Impulse, emulation, 
and In these pages it will be understood as meaning only 
that personal pride in, and the strife for, comparative 
success over one's fellows which arises within the individual 
who finds himself one among a company all of which Is 
active in the field of Production. 

Competition. Since production, as has just been 
stated, may be the result of any one, or all, of these three 
psychic Impulses, it Is necessary to have one term for the 
particular impulse In which we are interested and another 
for the economic activity common to all three. In the 
case of activity in barter, however, there can be only one 
sort of causative impulse, and that One is based upon the 
relations existing between the individual and his fellows. 
It is quite possible to imagine a man as undertaking Pro- 
duction, from either desire or initiative, when competely 
isolated from all other men. It Is impossible, however, 
to Imagine him as undertaking Barter except as a form of 
relationship toward another Individual. There is there- 
fore no need to distinguish between the psychic impulse 
and the resultant activity. The word competition will 
be used to denote either the actual activity In the field of 
barter, — that is, in effort aimed at the transfer of value 
ALREADY PRODUCED from one ownership to another, by 
any other means than illegal violence, — or the spirit which 
lies back of It. 

To go still further back Into biological processes, the 
original psychic impulse which leads the Individual to 
assume the competitive attitude may be, under existing 
laws and conditions, any one of quite a number. It may 



EMULATION AND COMPETITION 91 

be envy, greed or wanton vindictiveness, upon the one 
hand, or the most natural and wholesome impulses of self- 
preservation, acting under necessity, upon the other. Like 
the dealer in impure milk, the conscience of the competing 
individual may cover any degree of consciousness of guilt, 
from the most brutal disregard of other persons' welfare 
to the most thoughtless acquiescence in an existing state of 
affairs which there is no apparent reason or way to alter. 
With all of this, economic discussion has no concern. 
That Is the business of the moralist. But when any one 
of these impulses has led the individual to assume the 
competitive economic attitude toward his fellows there is 
necessarily present a corresponding competitive psychic 
attitude which, as a matter of relations between men, it is 
proper to recognize and name. And since, whatever may 
have been the original impulse, the result to the outside 
community, as in the case of the ignorant dairyman, is 
equally destructive, one name will suffice to cover the 
entire phenomenon. To both the psychic attitude and the 
economic activity, therefore, is assigned the name com- 
petition. The word will be understood to cover impar- 
tially the dicker over the price of exchange between sepa- 
rate goods or trades, or over the price of labor, and the 
strife between individuals over questions of privilege of ex- 
change; it must consequently include also all questions of 
legal ownership of goods or privileges. 

Emulation and Competition Compared. As already 
pointed out, production may or may not be conducted 
in a spirit of emulation, or of personal pride, either 
arrogant or charitable, in one's superiority over one's 
neighbor. Undoubtedly the best grade of productivity is 
developed by Its presence. Nevertheless, both Initiative 
and desire furnish good seconds. But barter, on the other 
hand, cannot possibly be conducted without a sense of 



92 THE COST OF COMPETITION 

relationship toward one's fellows; and even a cursory 
examination will reveal the fact that the competitive rela- 
tionship is not and cannot be a pleasant or a wholesome or 
an unselfish, Christian one, whatever may be the nature of 
its results. It is, in its very essence, an egotistical, over- 
bearing thing, conceivable with the doer only in relation 
to the overcoming of other people. Whereas a great deal 
of very useful production is carried on solely for the love 
of the work done, with almost entire unconsciousness of 
what anyone else is doing in similar lines, with objective 
consciousness only of the raw material in hand, competi- 
tion, on the other hand, from its very nature, can be objec- 
tively conscious only of other individuals : those whom it 
seeks to contravene. What the emulator gains by his 
striving no one else loses; it comes from the unending 
bounty of nature. But what the competitor gains can 
possibly come only from his opponent's loss. With com- 
petition, therefore, in order to completely describe its 
nature, there must be added the idea of an aggressive 
desire and attempt at circumvention, frustration and annul- 
ment of the other's efforts and enjoyment which is quite 
foreign to emulation. ^ 

Only in the most unnatural individuals is the natural, 
wholesome emulation of two men who are working side by 
side at a common task tainted with an unnatural, sickly 

2 W^hen the present argument reaches the point of considering what is 
called "barter-cost" it will be seen that a great many individuals are 
engaged in competitive activity as hirelings of the leaders in the struggle. 
They are paid a salary or wages to "push" some article. In their en- 
deavors to do this honestly and well they are often quite unconscious of 
the true nature of their efforts. They are doing their best to earn their 
income, and whatever success crowns their work seems to them merely as 
so much good created out of nothing. It will be seen later that this never 
can be true. But the point now to be emphasized is that they can honestly 
think so only when their station in the competitive ranks is a com- 
paratively low one. Their employers always know well that each sale 
they may make, each contract they may close, is merely one drawn away 
from the enjoyment of an equally hungry competitor. 



EMULATION AND COMPETITION 93 

envy,, which meanly seeks the destruction of the other's 
goods more than it does the increase of one's own. There 
are such men, but they are fortunately in the extreme 
minority. With competition, however, it must be recog- 
nized at the start that the underlying idea of the whole 
process is just this hope of undermining another's welfare. 
As already pointed out, it does not necessarily arise from 
inherent meanness of spirit on the part of those entering 
upon barter; but it not only begets it, but it demands its 
cultivation before marked success may possibly be attained. 
It exists primarily because the institution adopted by 
public opinion for the determination of the price of ex- 
change permits no other attitude, permits increase of one's 
own goods, in exchanging, only through the medium 
of the active decrease of another's goods. Since all 
men are at all times most anxious to carry on, from 
mere appetite, the greatest volume of exchange and con- 
sumption possible, there is plainly no need to promote 
these processes. There is no need of other prelimi- 
nary to exchange, after production, than the determina- 
tion of an equitable price. Such a determination would 
appear, to the rational investigator, to be a mere ques- 
tion of accurate record of individual production, a 
purely intellectual question, its peaceful scientific settle- 
ment, in a civilized community, to be accomplished by rea- 
son and to be protected by law. But the reference 
of the matter to barter for settlement allows the public 
reliance to lapse, instead, to a balance of personal 
forces which are quite other than rational; in reality to the 
clumsy method of approximation known as the trial by 
nerve-duello. In all forms of duello success may be at- 
tained only by doing harm to one's opponent; but for 
refinement of veiled malevolence, of result if not of will, 
the duello which was relied upon in questions of criminal 



94 THE COST OF COMPETITION 

law before the Carlovinglan kings cannot compare with 
the form of duello known as barter which is relied upon by 
the twentieth century for the settlement of all questions of 
economics. The instinctive contemnation of its spirit, by 
all peoples at all times, is best attested by the attitude of 
the world toward the Jewish people and their racial avoca- 
tion. But it is not the pawn-broker nor the ready-made- 
garment dealer of New York's East-Side, operating upon 
a microscopic scale, who best typifies the meanness of 
barter. It is the stock-market and its offspring, the 
" trust," operating upon a scale in which millions are units, 
respected, upheld and deferred to by the highest In the 
land, with its " corners," Its forced sales. Its purchases 
" short " and its deliberate fluctuation, whether by 
" bulls " or by " bears," of the valuation of securities 
owned by helpless individuals scattered all over the land, 
— solely in order that self may gain through loss by the 
opposing faction and by the public, — which Is by far the 
baldest Instance of this process now extant. 

Emulation vs. Competition in Relation to the 
Commonwealth. In emulation the underlying Idea Is to 
produce more wealth than one's neighbor. The funda- 
mental impulse back of this Idea may be taken. If you 
choose, to be pure selfishness, that one's self may enjoy 
the consumption of more wealth. But If this selfishness 
be compelled to seek satisfaction by exertion against 
natural obstacles, then must one's neighbor be benefited 
incidentally to one's self. It is only when the selfishness 
Is permitted to seek gain by another's loss, by exertion 
against human resistance, that it may become harmful to 
anyone but self. But if this be forbidden and the selfish- 
ness be guided into emulative channels, there arises closely 
second to it the pleasant consciousness that the extra effort 
Is resulting in a gain to the community as a whole. The 



EMULATION AND COMPETITION 95 

worker and the rest of society are both better off for his 
emulative striving; there are more goods in the world; 
all commodities are more easily obtainable. His neighbor 
is no worse off than before, except for what loss of pride 
accompanies defeat in honorable contest, breeding lusty 
stimulus to further effort. As this reaction always appears 
in the neighbor, to some degree at least, the result of the 
emulation is an increase of the loser's wealth as well as 
in the winner's. Both of them produce and possess more 
wealth, as the result of the contest, than they did before : 
one with and the other without added honor and prestige. 
Therefore it is to be stated with especial emphasis, as 
the thing primarily characteristic of the nature of emula- 
tive production, that, whether it be undertaken from the 
most sordid or from the most altruistic of motives, the 
results accruing to all parties actively concerned, and to the 
public outside, are alike a gain in wealth and in bodily com- 
fort, the latter differing between the several parties only in 
degree. But in competition the underlying idea is just the 
opposite of this increase in the production of wealth. It 
is to secure more wealth to the striving individual alone, 
not by producing more from the bosom of Mother Earth, 
by making two blades of grass grow where one grew 
before, but by getting it away from the store already ac- 
cumulated by one's neighbor; and if, incidentally to the 
effort, the neighbor may only be somewhat discouraged 
also, so that he shall not resist so strenuously the next 
time, why that is further gain to the bargainer. 

Barter Further Defined. In its present form, com- 
plicated as it is by the intricacy of modern life far 
away from the simple elementary bargain between fisher- 
man and hunter which was adduced for the sake of illus- 
tration, barter may be defined as the forced passage 
through one's hands of the ownership of either goods or 



96 THE COST OF COMPETITION 

the chance to labor at the greatest possible profit to the 
temporary owner, or, what is the same thing, at the 
greatest possible cost to the community of the value con- 
cerned. This means that, in the case of goods, the result- 
ant price will be the highest which may possibly tempt pur- 
chasers; in the case of labor it means that the lowest wage 
will prevail which will possibly tempt labor to exertion. 
The standard phrase for this method in railroad economics 
is " charging all the traffic will bear." The same practice 
is the standard, and the only successful, policy in all forms 
of business. The widespread delusion that business-effort 
consists in keeping prices as low as possible merely shows 
how universally the profit-seekers have been able to 
deceive the public, often including themselves. The con- 
stant aim of all business-endeavor is undoubtedly to make 
prices seem low. Owing to the opposition of the other 
dealers in the same line it is undoubtedly also the aim to 
make prices actually as low as possible, — if the word pos- 
sible be interpreted as meaning " consistent with getting 
the maximum of profit transferred from the community to 
their own pockets." Even if " quick sales and small prof- 
its " be the motto which leads to success, it none the less 
remains an incontrovertible fact that if the seller thus 
derives a greater net income he has drawn from the 
pockets of the people a greater tax for his support; nor 
does the fact that he has handled more goods offset the 
loss, for it will be developed later that the total amount 
of goods thus handled to the community cannot be 
increased by any such means. What he has handled his 
competitors have failed to handle; and if the quick sales 
have been artificially stimulated by extra expense in adver- 
tising, for all this, too, the buyer must pay, and the cost to 
the community is thus doubly increased, although trebly 
disguised. 



EMULATION AND COMPETITION 97 

When the final survival of the fittest proclaims the most 
successful business-man, it always develops that he became 
so because he concentrated his skill and effort not upon 
keeping down the cost of production, but upon keeping up 
prices. The common run of little profit-seekers, who 
scrape along upon what they consider to be a bare living, 
always make this mistake, of honestly trying to sell near 
the cost of production, — though where is the one who 
strives purely in this line ? The successful fellows are those 
who abandon all pretense of handling goods and perform- 
ing service; who go in, instead, simply to " make money.'* 
And they do make money, because times are " good," 
when prices are at their highest, which is naturally the 
time of greatest hardship to the consumer. 

For all of such effort, whether of trying to buy cheaply 
or to sell dearly, society as a whole cannot possibly be any 
the richer ; the loser at the game is certain to be the poorer. 
While this effort is not, of course, to take away the other's 
wealth by visible physical force, which would be bald 
robbery, yet it is the nearest possible thing to this which 
escapes the eye or the hand of the law: the persuading 
him to relinquish his legal title to his wealth (or to that 
portion of it which constitutes the profit under dispute) 
under the artificially created and more or less forced idea 
that it is profitable, or expedient, or necessary for him to 
do so, when it is not. Whatever the method, however, 
or the conscious motive behind it, the effort is aimed 
straight at the other's loss ; in no other way can barter suc- 
ceed in amassing wealth or in demonstrating the personal 
superiority of its initiator. ^ 

3 In the State of Ohio exists a factory which has become world-famous 
as exemplifying the most advanced ideas as to the most humane methods 
of organization of workmen under the modern factory-system. To de- 
scribe in detail the democratic, cooperative government of its depart- 
inents by committees, the bathrooms, tjj^ ^JBing-rooms, the retiring-rooms 



98 THE COST OF COMPETITION 

It IS only the tremendous complexity of modern indus- 
try and commerce which prevents its always being per- 
fectly plain to the bargainer, and to the onlooker, that 
what he gains by bargaining the other must lose. So prev- 
alent is barter as the standard avocation of the most 
prominent classes of society that it is this fact alone which 
preserves one's faith in the general uprightness and 
generosity of the race. Because of its inevitably being, 
however, an attempt at loss to one's opponent, it may be 
stated with the utmost deliberation and earnestness that 
premeditated entrance into barter with another over the 
price of goods or of labor the quality of which is not in 
question, whether it concerns a ten-cent haircomb or a 

for the women-employees, etc., would quickly identify the place to the 
reader; for in these points it is unique. The president of the corporation 
I know personally to be one of the most generous of men. The vacation- 
trips in summer and entertainments in winter which he presents to his 
employees are phenomenal in their open-handedness. Yet at all this feast 
of altruism attends a skeleton. It occupies the center of the works and 
constitutes the explanation of the source of the power and wealth which 
permit this generosity. I call it "the cemetery," the graveyard of men's 
hopes and happiness. It is a room some fifteen feet square, as I remember 
it, almost devoid of windows and doors, the walls of which are lined to 
the ceiling with shelves. Upon the shelves are samples of every machine, 
originally competitive with the enterprise in question, which it succeeded 
in driving off the market before it could attain to the ability to give 
trips to the World's Fair to hundreds at a time. These machines are not 
upon the shelf, literally and figuratively, because their mechanical design 
possessed no value; for very many of their essential features are now 
made use of, incorporated into the design of the victorious corporation. 
They are there because the law of barter permits a competitor whose 
goods possess merely a greater (but not the only) value to entirely cancel 
the earning-capacity of competing goods which possess a very substantial, 
but a lesser, value. How many broken hopes and broken families are 
represented by this cemetery no one may ever know, with accuracy; but 
anyone who looks upon the display can readily believe that our generous- 
hearted president must labor in charity for more than one lifetime before 
he can erase from the books of the recording angel the account of what he 
has done — was forced by existing law and public opinion to do, perhaps 
with no malevolence on his part — in ^'establishing his business." 



EMULATION AND COMPETITION 99 

ten-million-dollar railroad, is as thoroughly and funda- 
mentally a selfish and unchristian act as is any open to 
human choice. The fact that familiarity with the sordid 
deed has bred respect, or at least toleration, for it does not 
alter the truth as to its inherent nature. 

Emulation and Competition Contrasted. In order 
to demonstrate the truth of this statement and to com- 
plete the distinction between the two opposite pro- 
cesses. Emulation and Competition, in their fundamental 
type, the following parallel columns are presented, to 
contrast their opposite effects upon the surrounding body 
politic, as well as their reactionary effects upon their 
followers : 



EMULATION 
is strife to see who may add 
the most wealth to self and 
to the body politic simulta- 
neously, by increasing one's 
natural productivity. It con- 
stitutes the chief motive 
power of production, and 
therefore of pure exchange, 
or true commerce. 



COMPETITION 
is strife to see: 

(i) Who may secure away from his 
neighbors the chance to begin to produce 
wealth; for the ability to find a market 
for one's goods or labor, at any price, is 
a plain preessential to production; 

(2) Who may acquire from his neigh- 
bors the most of their wealth, by exalting 
prices in selling to them or by depressing 
prices in buying from them, in so far as 
ability will permit; 

(3) Who may most decrease the 
wealth of the body politic (though the 
barterer is not conscious of this purpose 
except when he tries to beat the govern- 
ment) (a) By excluding others from the 
privilege of exchange or of labor; that 
is, by controlling the market; or (b) By 
decreasing production so as to maintain 
or exalt prices; 

For by either plan the active, aggres- 
sive bargainer wins. Either process con- 
stitutes a restraint of trade, — a restraint 
merely of the other fellow's trade, as the 
bargainer sees it, but none the less a re- 
straint of the total volume of trade. 



lOO 



THE COST OF COMPETITION 



In emulation the efforts 
are side by side, or parallel, 
and the economic resultant 
to society must consist of the 
sum of the individual forces 
exerted. This is shown in 



In competition the efforts are face to 
face, or opppsing, and the economic re- 
sultant to society must consist of the dif- 
ference of the forces of the several indi- 
viduals. This is shown in Fig. 2. If 
mil represent, each by its direction and 



R 



P 



Fig. I. Emulative Eiforts 




Fig. 2. Competitive Efforts 



Fig. I. If mil represent, 
each by its direction and 
magnitude, the productivi- 
ties of a number of individ- 
ual producers, of differing 
ability, active upon a given 
field of production FF, then 
(i) Their directions must 
be substantially parallel. 
Equilibrium insures this. 
Education, imitation and ri- 
valry all lead the individual 
to harmonize his efforts, in 



magnitude, the forces exerted by the same 
Individuals as in Fig. 1, but now active 
in competition about the common cen- 
ter C, then : 



(i) Their directions must be either 
centripetal or centrifugal; that is, either 
seeking a single objective opportunity for 
sale, exchange or employment, or else 
seeking to divert a given single subject- 
ive opportunity (a purchaser) each into 



EMULATION AND COMPETITION 



lOI 



production, with the general 
trend of advance. 

(2) The resultant net 
productivity of value to the 
community is shown by R 
and is practically equal to 
the sum of the component 
forces. 



his own shop. (The average number of 
such radial forces about a single center, 
in actual life, is about live or six.) 

(2) The resultant net productivity of 
value to the community is shown by R, 
the geometric resultant of IIIII. This is, 
in one sense, equal to the difference of the 
component forces. 



If one man's effort or efficiency should increase at any 
time, it may be expected, from the natural spirit of rivalry, 
that the eifforts of the others will increase similarly, in 
response. This is equally true on either side. Therefore : 



(3) The resultant net 
gain to the community, in 
such case, must be approxi- 
mately as many times the 
increase of the original 
worker as there are co- 
workers. 



(3) The resultant net gain to the com- 
munity, in such case, must bear a very 
small proportion to the total increase in 
effort. If the growth of each worker's 
eifort is in uniform proportion to his orig- 
inal effort, the net gain to the com- 
munity must bear the same proportion to 
the total increase of effort that R of 
Fig. 2 does to the sum of all the I-forces 
(R) of Fig. I. If the growth of each 
worker's efFort were alike, there would 
be no resultant change in R: the net gain 
to the community from all this increase 
in skill and energy ivould be just zero. 



(4) The direction of the 
common progress of society 
is in the direction of each 
man's efforts. Therefore, the 
direction of individual mo- 
tion, which is determined by 
the effect of the resultant 
force upon the common 
mass, is always positive. It 
is in the direction of his own 
effort and of the community- 
effort. Each citizen observes 



(4) The direction of the common prog- 
ress of society is in the direction of the 
efforts of less than one-half of the competi- 
tors. Therefore, the direction of individ- 
ual motion, which is determined by the 
effect of the resultant force upon the 
common mass, is very largely negative. 
A large proportion of the competitors ob- 
serve that their individual efforts are 
crowned with failure and that their mo- 
tion is an enforcedly backward one, hope- 
lessly overcoming their most strenuous 



I02 



THE COST OF COMPETITION 



his efforts crowned with suc- 
cess and stamped with the 
approval of the community. 
His moral attitude is, there- 
fore, one of gratification, 
enthusiasm, renewed hope 
and patriotic pride. His 
physical attitude becomes a 
corresponding one of re- 
newed vigor. His pride in 
his work sustains him more 
than does the food which it 
brings to him. 



efforts. {Bradstreet's reports that some- 
thing like 90 per cent, of all new com- 
mercial ventures are failures.) The re- 
sultant moral attitude is therefore one of 
disappointment, of dejection, of sullen 
enmity or vengeful rage, according to the 
individual make-up. The worker's phys- 
ical attitude becomes either one of list- 
lessness or, if vigor be retained, it tends 
to be diverted into moral dissipation or 
into violence, as occupations bringing 
more satisfaction than does labor. He is 
tempted to become, — indeed, he is forced 
to choose between becoming, — either a 
cynic, a drunkard, a gambler, a tramp, a 
criminal, a lunatic, a suicide or an an- 
archist. Escaping all of these, — for there 
are all degrees of entanglement in this 
situation, — he is at least forced into that 
familiar class where we speak of him, as 
kindly as we can, as one who has " lost 
his grip." 



(5) The velocity of prog- 
ress, due to the action of the 
resultant force upon the 
common mass, is much 
greater than that which 
would be due to the efforts 
of the individual alone. 
Each has the sense that the 
others are helping him. The 
moral and physical well- 
being just noted is still fur- 
ther enhanced thereby. 



(5) The velocity of progress, due to 
the action of the resultant force upon the 
common mass, even as observed by those 
with whose efforts it coincides in direc- 
tion, is discouragingly small. Even to 
the successful man success does not seem 
prompt or complete or satisfactory. It is 
tasteless. He awakens, usually in later 
life, to the bitter realization that the ut- 
most skill in bargaining cannot possibly 
win one happiness. 



(6) With the individuals 
associated in emulation there 
is no inducement to depart 
from parallelism and there 
is every inducement to per- 
fect it. 



(6) In competition there is every in- 
ducement to attain the minimum of par- 
allelism and the maximum of concentra- 
tion about a common center. When the 
forces are centrifugal it is plain that the 
system is in stable equilibrium: that the 
resultant will move the common mass 
toward a point where all the forces are 
equally centrifugal, the resultant is zero 



EMULATION AND COMPETITION 103 

and no more motion is possible. When 
the forces are regarded as centripetal, any- 
angular gap on one side, which alone 
could make the resultant R of appreciable 
size, reveals an opportunity for the en- 
trance of a new competitive force, the 
addition of which will bring the system 
again into the maximum degree of neu- 
trality. It will be proven later that there 
always exists upon the outside of any 
such system a pressure which will force 
into It additional centripetal energy 
whenever opportunity occurs. ( See 
page 184.) 

This last statement in regard to competition is the same, 
In other form, as that given on page 81. Complete bal- 
ance of the radial forces would, of course, result in no 
motion at all. The truth of the law is shown by the fact 
that such deadlock as this is exactly what Is occurring 
repeatedly, In actual commerce, under the name of " hard 
times " ; but it Is only local and temporary. Some motion 
of trade must be permitted, of course, else the radial forces 
would lose their sustenance and die away. But It always 
tends toward a minimum, so far as barter Is influential 
in guiding it. It Is emulation alone which promotes all 
industry and all commerce; it is competition alone which 
limits that activity to Its present repressed configuration. 

The play of forces which has just been discussed in an 
abstract, general aspect develops concrete illustrations in 
any walk of Industry or commerce which one may choose 
to enter. In any such case It Is vain to expect that the 
regrettable effects of competition will be visible in the pe- 
cuniary returns, or the lack of them, awarded to the 
parties directly engaged therein. Indeed, quite the oppo- 
site Is true. The most gainful of all occupations, to the 
individual. Is successful barter. This paradox, that the 



I04 THE COST OF COMPETITION 

one line of effort which accomplishes practically nothing 
more than the negativing of a neighbor's equal effort in 
the opposite direction should be more highly rewarded by 
the community than is effort productive of value, consti- 
tutes the last and heaviest indictment of the competitive 
system on the score of injustice ; but the explanation of the 
fact involves a discussion of the interaction of two such 
systems as Figs, i and 2 when operative side by side within 
the same community. This task involves more than the 
simple diagrams just presented and must be deferred to a 
later page. Nevertheless, no actual incident of competi- 
tive commerce can be investigated, in terms of what has 
preceded, without according full evidence of the absurdity 
and the inefficiency, if nothing more cruel, which is ever 
characteristic of the competitive plan of procedure. 

For instance, let it be known in the open market that a 
certain mill-owner desires a steam-engine. In this case the 
consumer is not one of the common populace, influenced by 
the fashion of the hour or any similar whim. He is neces- 
sarily a man above the average of intelligence, although 
it is quite proper to assume that he is not an engineer. He 
enters the market impelled by quite other motives than 
psychic desire. He has no craving for steam-engines to 
be gratified. On the other hand, he probably decides to 
buy one with great reluctance; he would much prefer to 
keep his money in his pocket. But he needs an engine to 
perform a certain service in his factory. He knows what 
that service is, but he is not supposed to know what sort 
of engine will best perform it; that is the business of the 
professional engineer. 

The supply of that engine, on the other hand, will not 
ordinarily bring with it the myriad of economic questions 
arising in the production of any finished article from the 
raw material, such as land-rent, interest, taxes, etc. With 



EMULATION AND COMPETITION 105 

engines of moderate size experience has resulted in the sur- 
vival of a half-dozen standard types, each of which is 
especially fitted for some particular sort of service. It is 
the buyer's task to select the correct type to suit his own 
particular conditions. 

Nearly all engines are built by one party and sold by 
another. To the seller they come from the factory com- 
plete and unalterable. They appear to him as a box ready 
, for shipment and a charge upon his ledger. Of all 
I economic and engineering questions which lie back of those 
items he Is totally unconscious, economically speaking, if 
I not in actuality. 

But between the mill-owner who needs an engine and 
j the series of boxed engines awaiting his orders in their 
! warehouses there arise two questions. 
( I ) Suitability to his purpose ; 
(2) Price. 
j To settle these questions there journey to his mill-office 
I a set of representatives of the several engines : commercial 
I travelers of the highest type, practically all of them col- 
lege-bred engineers, usually of good family and in the 
pride of their youth. Their object in coming is threefold : 

( 1 ) To secure the order; 

(2) To take it at a good price; and 

(3) Quite Incidentally to the others, to furnish the 
buyer with the engineering information necessary for an 
intelligent choice productive of value and satisfaction. 

The Importance given to these several objects, In the 
mind of the seller, is In the order named. Their impor- 
tance to the buyer and to the community, as a matter of 
fact, is exactly the opposite: (3) should come first and 
(i) and (2) should not enter, to the consumption of 
valuable time and effort in no production of value, at all. 

It is also properly to be assumed that the several 



io6 THE COST OF COMPETITION 

engines are all equal In the honest quality of their work- 
manship. It is usually so in actual practice, if we exclude 
a small and utterly worthless minority ; but their different 
designs make them of varying suitability to the mill- 
owner's purpose. 

What are the results, to both parties to the conference, 
of this method of attaining a choice? 

As to the salesmen and their backers : 

( 1 ) One only can possibly secure the order, The^ 
rest are inevitably condemned to failure. There are any- 
where from two to ten of them. Any one of them could 
have given all the information needed, aided the buyer to 
a really intelligent selection, taken the order and had the 
engine shipped, in one-tenth of the time actually con- 
sumed, had he been paid his same salary to represent all 
of the engines impartially. But instead, all but one of 
these young men are Inevitably destined to journey, argue, 
scheme and worry, wait and go home again, probably 
repeatedly, utterly In vain. An efficiency of result ranging 
anywhere from fifty down to ten per cent, of the con- 
tributed effort certainly does not speak well for the intelli- 
gence of the competitive plan, in the light of modern 
refinements of efficiency. 

(2) The order has to be taken at the lowest price at 
which the winning representative can afford to handle the 
job and continue to do business. Although the efforts of 
the five losing salesmen have finally left in his hands the 
job, the privilege of building an engine, they have at least 
forced him to accept the task at a remuneration so low 
that It is questionable whether he wants it or not. So 
productive of human happiness to all Is this plan! 

As to the buyer: 

( I ) Instead of having the comparative advantages 
and disadvantages of the several machines laid impar- 



EMULATION AND COMPETITION 107 

tially before him, that he may make intelligent and accu- 
rate choice, he has had to contend with the efforts of six 
intelligent young men attempting to blind him and guide 
him in six different directions. In a maximum amount of 
time and effort he has obtained a minimum amount of 
information, of a minimum quality as to reliability and 
lucidity, — if, indeed, he has not been accorded a deal that 
he were richer without. Any one of the six young men, 
if he had been equally supplied with the records of the 
several engines, if he had been impartially related to all 
of them and had not been interfered with by the other 
five, could have aided the mill-owner to a far more intelli- 
gent decision in one-tenth of the time actually taken for 
negotiation. But no one of them is permitted to try to 
furnish true information. He need not always deliber- 
ately lie, although the temptation is great and human 
nature is weak; but he must confine himself to those half- 
truths which throw the best light on his own engine and 
which derogate the others by inference, — a procedure 
which is separated from unmitigated deception by an 
utterly impalpable line. If, for instance, his professional 
judgment leads him to believe that another engine than his 
own would better suit the service proposed, his whole atti- 
tude is inevitably either one of falsehood to the buyer or 
of falsity to his employer. 

(2) As to price, that shows the worst failure of all. 
The engines were already in the seller's hands, perfect and 
complete, before negotiation opened. When it is con- 
cluded one of them is transferred to the purchaser's 
ownership, absolutely without alteration or Improvement, 
at just about twice its completed cost as it left the factory. 
For of course the selling-houses are not doing business at 
a loss, — " for their health," as the phrase goes. If they 
sell an engine only once out of every six expeditions made 



io8 THE COST OF COMPETITION 

by their salesmen, that one sale must bring in enough 
gross profit to cover the cost of all six negotiations, with 
a margin over for net profit. It is inevitable that the 
consumer shall pay the whole cost of competition. But 
what he loses the seller does not gain. Most of It has 
been lost in abortive effort. It has already been pointed 
out that the seller failed in all of his objects except to 
scrape what he considers a bare living. How completely 
has the buyer failed, also ! He started out to buy at the 
lowest price possible. But he started out in the wrong 
way: the rriethod of barter; and when it is finished and he 
has paid the cost of conducting the barter he finds that his 
engine has cost him twice what it would have if there had 
been no barter, if all the bargainers were out of the way, 
with exchange left free and unhampered, promoted only 
by natural desire, by the law of supply and demand. Then 
he would have gone to a warehouse where all the engines 
were displayed, side by side, each with its record published 
in full: its failures and its successes, and where all 
were represented impartially by a single salesman skilled 
as to the proper field for each. There he would have 
purchased with a maximum of accuracy and a minimum of 
time and effort. 

As to the engine itself: 

(i) The primary effect of the salesmen's efforts Is to 
conceal, to the maximum degree possible, the true com- 
parative merits and demerits of each. But the sole guide 
to all evolutionary progress is the survival of the 
fittest. There is no line in which it is more essential to our 
material prosperity than In the consumption of articles 
involving technical skill in their production. To the 
prompt and accurate establishment of which of these Is, in 
any case, the most fit to survive, all barter stands, with all 
the power with which it stands for anything, as an 



EMULATION AND COMPETITION 109 

absolute block. The only method of exchange and con- 
sumption under which the merits and demerits of each 
aspiring applicant for public favor shall be accurately 
determined with the maximum celerity is that of perfectly 
free exchange. The consumer will stand as the censor, 
with all the interest and all the impartiality which can be 
brought into the case: If he only be given that chance to 
Intelligently express himself which free exchange awards. 
The only advocate needed by any novel device or proposi- 
tion is the enthusiasm of its originator and Its own 
inherent merit, — -and both the personality of the salesmen 
and the material worth of the article which lie back of 
modern commercial success are very different from this 
indeed. 

It is further to be remembered that all questions back 
of the complete engine, boxed and shipped, were neglected. 
If there be need for emulation in order to attain to good 
engine-design and construction, there is the place for it; 
it cannot possibly enter the field of barter just described. 
But if the box be only opened, what a mass of competitive 
waste, instead of productive emulation, is laid bare! 
Every item In the entire engine: every standard screw, 
every pound of pig-iron, every day of labor; every adjunct 
to the making of any of them : every building, every tool, 
every piece of land, every mile of transportation, which 
has entered Into the furnishing of every minor item of the 
whole completed structure, — has been subject to the same 
competitive haggling over price and quality as that just 
outlined: just as unnecessary, just as Inefficient, just as 
costly ! At every step has this enormous burden of wasted 
effort and obscured truth been piled up until, to quote 
Carlyle freely, the greatest wonder Is that anything ever 
does manage to get itself somehow done, at any price, how- 
ever great. 



no THE COST OF COMPETITION 

Yet this is competition at its best, between intelligent 
parties, over goods where there is solid ground for tech- 
nical decision, where mere whim is not the chief motive in 
the buyer's choice, to tempt the evil powers of the seller, 
and where the prize at stake is a few dollars, more or less. 
Most commonly, with the staple commodities such as 
wheat, coal, cotton, etc., where the differences among 
a number of samples is to be determined only by microscope 
or test-tube, the needlessness, the obliquity and the waste of 
commercial barter are far worse than in the field described. 
What it is at its worst only God knows. Even in the sale 
of goods where the buyer is the ultimate consumer, instead 
of a mere director of its use, it is far worse. If it costs as 
much to sell a steam-engine as it does to build it, with a 
sewing-machine it costs twice as much and with a shoe or 
a sheet of paper five times as much. As the article 
decreases in size and importance this ratio grows, until in 
some of the minor articles of daily consumption It reaches 
several fold. 

In the exchange of ownership in the organizations 
where these things are made or sold, in the stock- 
exchanges of the world — where exchange, now no longer 
a pure hand-maiden to production, has become prosti- 
tuted to the pleasure of and maintained or starved at the 
mere whim of Barter — the evil of the Institution becomes 
far worse. The worst we shall never know. Not all the 
legislative and judicial probings of beef-trusts, railroad 
rates or insurance-company Investments may ever hope to 
unearth more than a tithe of the scandal. 

But in no such case does the evil develop as It does In 
the purchase and sale of labor. Here the things at stake 
are life and family, soul and honor, — not merely dollars. 
To even partly appreciate the situation we must first know 
more about it. 



VII 
SPECIALIZATION IN BARTER 

TO-DAY society has grown, In complexity of 
organization, far beyond the primitive period 
when each producer carried his goods to market 
and there bargained over their exchange for others. The 
same arguments which had already led to specialization 
in production, whereby, even in those primitive days, each 
man was a butcher, a baker or a candle-stick maker, and 
not all three at once, would naturally, and eventually did, 
lead to a further subdivision In specialization: namely, 
that between production on the one hand and barter on 
the other. If barter Is to exist at all. If It be true that we 
have not yet learned how exchange may be effected with- 
out It, It were plainly better that those individuals who 
were equipped by nature to succeed best as producers 
should concentrate all their time and talent upon produc- 
tion, while those best adapted for bargaining should 
devote all of theirs to that avocation. 

This specialization was not effected until very late In 
the history of economic evolution. At a very early period 
arose the merchant, to be sure, whose time was largely 
and Is now often wholly given to competition ; but his use- 
fulness in the economic world was also largely due to the 
fact that he carried a stock of goods. When the political 
environment of production and exchange was more un- 
certain than it Is now, and when lack of transportation 
exposed each locality to the full measure of local irregular- 

III 



112 THE COST OF COMPETITION 

ity In production, the necessity for carrying stocks of goods 
was much more vital than It Is now. Competition, too, 
was narrowly restricted by political limitations and the 
lack of transportation. In consequence, the merchant of 
the earlier centuries was much more a supervisor of deposit 
of goods for exchange and an Insurer against fluctuation 
In valuations than he was a bargainer In the modern sense 
of the term. To-day, however, this relation Is quite 
reversed. To-day he very often possesses no stock of 
goods at all; all of his business Is done on the basis of 
orders upon the warehouses owned by someone else, or by 
orders upon someone who possesses such orders : securities, 
as they are called. 

Reverting again to primitive Illustrations of economic 
principle, rather than to early periods of economic history. 
It may easily be Imagined how the Illustrative community 
of fisher-folk soon gravitated Into a better plan for barter 
with the hunters than the one previously described. The 
competition between the fishermen for the privilege of 
exchange would soon develop the fact that some one or 
more among them possessed exceptional talent for driv- 
ing a bargain. Such persons could of course bring home 
from market a greater proportion of hares for a given 
supply of fish than could the average fisherman. Hence, 
it would pay the majority of the fishermen to strike an 
agreement with these Individuals, saying: *' You repre- 
sent us at market, taking charge of our fish there, exchang- 
ing them for hares upon the best basis you can secure, 
and bring us back the hares. For your time and trouble 
we will then pay you In both fish and hares." As that 
method would save for both parties the split in character 
of work, between fishing and going to market, it would 
constitute a gain for both of them. 

It would soon develop, of course, that one bargainer 



SPECIALIZATION IN BARTER 113 

could handle the fish of a great many fishermen. Nor 
would It be long before the hunters, perceiving the gain 
which the fishermen had effected by thus organizing them- 
selves, would follow suit. Thus would the community 
divide Itself, for the first time. Into the two fundamental 
classes of modern economic organization : 

( 1 ) The Producers of Wealth, the greater in numbers 
and, on the average, the lesser In skill ; and 

(2) The Bargainers for Valuation, in the minority as 
to numbers, but embodying the bulk of the community's 
fund of nervous energy. 

The dividing line between these two classes, it Is to be 
noted, runs across all of the lines which divide the trades 
one from another. Each line of production possesses 
both Its producers and its bargainers. But at the present 
time the complexity of organization Is such that each of 
these two classes appears as Itself Involving many sub- 
divisions. Into speclahzatlon upon some special field of or 
aid to production or bargaining, as the case may be. 

This statement brings us Into contact with the most 
Important of all of these special applications of barter: 

Capitalism 

The subject must be opened with the following pre- 
liminary definitions. The term capital will be found to 
have been more fully defined upon page 18; the term 
capitalism will be more fully defined upon page 139 and 
following. A full comprehension of both terms is to be 
had only from the context. 

Capital. Capital Is the material creation of labor, such 
as tools, buildings, etc., which labor amasses and uses 
in its productive efforts for the further creation of value, 
or the earning of wages. 



114 THE COST OF COMPETITION 

Capitalism. Capitalism is the legal ownership of cap- 
ital by the capitalist. It is a creation of legal artifice, 
not of productive labor, and is used for the collection of 
interest or dividends, and not for the production of Value. 

To illustrate the distinction drawn here let us revert 
again to the hypothetical community of fishermen. It 
may be imagined that at first the available instruments of 
Industry were nothing more than lines, hooks and bait. 
The producers were compelled to stay on shore and fish 
from the rocks. Then, supposes General Walker, some 
one among the savages more enterprising than the rest, 
instead of wasting in sleep and gluttony the spare time 
afforded by a season of plenty, took his store of dried fish 
into the woods and there devoted his time and ingenuity 
to the construction for himself of, first, a raft, and later, 
as he became more skillful, a canoe. It is obvious how 
the possession of this canoe might expand the productive 
power of this man. Not only are fish apt to be more 
plenty offshore, but they are usually less variable In 
supply; and even when variable or wanting in one off- 
shore locality another might be sought, with the help of 
the canoe, where plenty existed temporarily. 

In General Walker's picture of such an elementary 
economic community he proceeds to develop from the 
situation the power which the canoe-builder's thrift and 
ingenuity had given him over his fellows: how he soon 
found it more profitable to stay ashore, hiring out his 
canoe to the fisherman who would give him the most fish 
for the use of It; how the additional leisure gained In this 
way permitted the building of more canoes and their 
rental ; how these rentals accumulated and multiplied until 
they amounted to plethora, and our primitive capitalist 
retired from active life to live in ease upon the returns 
from his past labor. 



SPECIALIZATION IN BARTER 115 

Such is the attractive picture of worldly independence 
as the result of thrift and industry drawn by General 
Walker, with the moral plainly pointed that such is the 
path which anyone may tread to the same goal, if supplied 
with the same fund of honorable thrift and industry to 
begin with. It is quoted here because it typifies the exist- 
ing popular conception of affairs among a very large pro- 
portion of educated people. 

More careful analysis, however, does not justify the 
same conclusions. It reveals, in the first place, that the 
process described by General Walker as a single elementary 
one is in fact complex and composite; that, in the second 
place, the nature and effects of its several parts are quite 
opposite in character; and that, finally, the existence of 
one of them in the body politic accounts in full for the 
very obvious fact that not everyone, nor even the majority, 
of those endowed with commendable thrift may hope for 
economic competence, not to mention independence, and 
that the people who do win these things very often display 
qualities quite the opposite of these. 

In the first place, it is important to eliminate the ques- 
tion of inventorship and its rewards from that of mere 
ownership; for this portion of the question is quite irrele- 
vant to the rest. Invention is merely a specialized form 
of labor; usually more productive than the other forms, it 
is true, and therefore deserving of reward with greater 
enjoyment of material wealth. But here must be 
reiterated with emphasis the plain fact that invention is 
indeed a mere form of labor, properly enjoying what It 
produces, as should all other labor, hut no more. Just 
what this quantity is may not be stated too dogmatically 
nor too simply. Moreover, the question is quite irrele- 
vant; for we are engaged, at present, in study of the proper 
distribution of wealth, not between one class of productive 



ii6 THE COST OF COMPETITION 

labor and another, but between productive labor on the 
one hand and capitalism on the other. Therefore the 
question of the proper reward for invention must be 
eliminated. It will be supposed that the art of canoe- 
building is already in existence and that the energetic 
young savage of the illustration merely copies others in 
building his canoe. If we suppose him advanced to the 
degree of success where he is recognized as a canoe-builder 
and is freed from the burden of using his canoes himself 
in fishing, by exchanging his current product of canoes 
for current supplies of fish, he then occupies merely the 
position of a specialized form of Labor engaged in Pro- 
duction, as do also the bait-diggers, line-spinners, etc. If 
law, order and equity be supposed to prevail, he enjoys 
in this way the full product of his labor. If so, no more 
current income than this can come to him in recognition 
of his current labor except as an abstraction from some- 
one else of the wealth produced by their current labor. 
What, then, is the exact significance of the income enjoyed 
by the retired canoe-owner of General Walker's illustra- 
tion ? To repeat, it cannot be value received as an equiva- 
lent for the labor expended in building the canoe; for such 
value is merely wages. That value the canoe-builder still 
holds in his hands, in the form of the legal ownership of 
the canoe itself, and can convert it into fish or cash at any 
time that he chooses to sell the canoe. Moreover, the in- 
come which he draws from the rental of his canoes has 
nothing to do with labor on his part, either past or current; 
he continues to draw this income even when he remains 
perfectly idle. It cannot be replied that he has to expend 
some time and effort in keeping his canoes in repair; for 
the fishermen using them must make good this expense. 
They have not begun to pay him a real net income or rental 
until after they have done so. The net income which he 



SPECIALIZATION IN BARTER 117 

enjoys and which alone is properly to be called Interest is 
what they pay him over and above this expense. In short, 
this expense in maintaining the constancy of value of 
capital, its depreciation, must be paid by labor before 
either labor or the capitalist can derive any benefit from 
the existence and use of the capital. 

The next point to be noted, and the one of maximum 
significance, is that if all of the fishermen were equally 
equipped with canoes no net rental could be had for their 
hire. Any fisherman temporarily in need of a canoe, 
through the disability or absence of his own, occasionally 
might wish to hire one. But if so, it always develops that 
he can borrow one without hire. There are, on the 
average, as many chances of some neighbor being tem- 
porarily unable to use his own canoe as there are of some 
active fisherman being temporarily In need of one. There- 
fore It results that the rental which he is called upon to 
pay amounts to no more than the actual depreciation of 
the capital which he has borrowed. This Is exactly what 
takes place to-day In remote seaside communities, whither 
the summer-boarder has not yet penetrated in appreciable 
quantity: the rental of boats Is, to the city-person's Idea, 
absurdly cheap. But It Is not; It Is merely naturally 
cheap, covering depreciation only. The opposite situa- 
tion Is visible, however, so soon as there arrives in the 
community a substantial addition to its population In the 
shape of summer-boarders. These people possess no 
boats whatever. They do very much need them, how- 
ever, else will their vacation be a failure ; and, while they 
own no boats, they are equipped with purchasing-power, 
as are the active fishermen. Therefore the hire of boats 
rises markedly, and the mere ownership of a boat, without 
any expenditure of energy in using it, now becomes a source 
of current income. 



ii8 THE COST OF COMPETITION 

In the modern fishing-community, wherein the avocation 
may not be followed, in certain lines, without the aid of a 
steamer or a schooner, the situation is the same. The 
common fisherman, deckhand or pilot is, economically 
speaking, like the summer-boarder. That is, he needs 
the steamer for his uses. He has no steamer himself. 
He has, however, wherewith to pay others for the use of 
one: not immediate purchasing-power, but the productive 
power of strong and ready muscles instead. Out of this 
current productive power he pays a current hire for the 
use of the steamer, called interest, to the steamer-owner 
who remains idle on shore. To be sure, he is not con- 
scious of this payment, by the name of interest; but 
it is made, nevertheless. What he calls his wages is 
his real productivity with the interest on the steamer's 
valuation, etc., deducted before it is returned to him In 
cash. 

Therefore it must be obvious that the interest on the 
use of capital, which General Walker typified by the 
rental-price of the canoe, is in reality a money-measure of 
the need of him who has not, as perceived and enforced 
by him who has. It Is plainly a direct function of relative 
difference in wealth and in need between the several indi- 
viduals or classes of the community. It must sink to 
zero when those differences become zero. 

The lessons to be drawn from this observation are 
primarily three in number, viz. : 

( I ) There is no possibility whatever of all individuals 
attaining incomes from the ownership of capital. If all 
citizens, or even the great majority of them, should suc- 
ceed in following the example, too often self-extolled, of 
the " self-made " man and accumulate capitalism to an 
extent equal with him, the immediate result would be that 



SPECIALIZATION IN BARTER 119 

no one would any longer draw any income in the shape of 
interest, dividends, etc. The current rate of interest 
would sink to zero. However fast the masses may suc- 
ceed in accumulating capitalism, in savings-banks or other 
form, it is only to the degree that the larger capitalists 
accumulate more rapidly than they that interest-rates 
(actual, not apparent) may be maintained. 

(2) Since interest is drawn in complete idleness, after 
the initial effort whereby the capitalism was hired out or 
'' invested " and the agreement upon the interest-rate was 
established, it can in no sense be regarded as the return 
to the capitalist of the value of any productive 
labor, either past or current, upon his part. The past 
labor, if any, of acquisition of his capitalism is conserved 
to him in his ownership of the principal of his *' capital," 
which he can liquidate at any time that he desires his pay 
for that labor. Of current labor on his part there is 
none; he works only when his capitalism needs reinvest- 
ment, which is just when it fails to draw to him an income. 
This income, or interest, therefore, can be regarded as 
nothing else than a bald abstraction by the capitalist, from 
the productive labor which hires and uses his capital, of a 
portion of the value which the latter produces, which is 
demanded and collected solely because the capitalist 
possesses the power to demand and collect it. 

(3) The portion so abstracted naturally becomes, by 
gravitation, the maximum which labor can pay and still 
have left to itself a surplus, in the form of wages, which 
is somewhat greater than it would have enjoyed had it 
refused to hire the capital and had continued in hand-labor 
instead. 

If it be said that herein, at last, is the justification of 
capitalism: that it merely transfers to the owner of the 
capital the productive power of that capital, as evidenced 



I20 THE COST OF COMPETITION 

by the Increased productivity of labor with, as compared 
to without it, the reply Is fourfold, viz. : 

(i) What potentiality for the production of value lies 
in any original form of capital, such as a novel or useful 
invention, over the methods previously prevailing most 
obviously belongs, If to any individual, to the inventor. 
At present he seldom gets it; but if he does not, the 
capitalist certainly cannot step Into his shoes and claim It 
upon the same grounds. 

(2) What potentiality for the production of value lies 
In later replicas of the original invention, by whomever 
created. Is immediately visible In the market-price of these 
duplications; that is to say. In the principal-value of 
the capital. The only money which can honestly be 
demanded upon the basis of this claim Is a single payment 
of this price. If the law is to prevent swindling, by re- 
peated collections from the community for a single value 
produced, It should permit the capitalist to be paid for the 
creation of his capital only once. That Is the only pay- 
ment which It permits to any other sort of creative labor, 
no matter how continuously productive to the community 
the fruit of that labor may ever afterwards be. That is, 
it should protect the capitalist In the ownership of his 
principal; but all current payments which he may receive 
for its use, over and above actual depreciation, should be 
compelled by law, in ordinary justice, to count as pay- 
ments in purchase of the capital. This Is equivalent to 
saying that the true Interest should be zero. In other 
words, the claim with which this paragraph Is headed, if 
logically analyzed, furnishes no legitimate explanation of 
interest. 

Standard Oil dividends, for Instance, are reported to 
have ranged as high as 42 per cent, per annum. Dis- 
counting all considerations of watered or otherwise inflated 



SPECIALIZATION IN BARTER 121 

valuations of stock, how many times must the original 
labor which w^as expended in producing the real capital, 
which this theory burdens with the responsibility for all 
of this interest, have been reimbursed for its exertions, 
since 1875? And still this labor is not paid — according 
to the argument that it is the original creation of the 
capital which justifies the drawing of interest. It has not 
begun to be paid. It still holds the full value of the 
principal as certificate of this work done so long ago. 
For this work it will acknowledge full payment only 
when, in addition to all of these payments of interest, the 
principal is liquidated. On all other stocks, usually earn- 
ing lower rates of interest, although the absurdity of 
the claim may not be so palpable, the injustice is just as 
pure. 

(3) This point can be brought out still more clearly if 
there be introduced into the elementary illustrative case 
still another step in specialization, one which is now an 
almost universal fact in modern industry : the one between 
the real production of capital and its mere idle ownership. 
We may imagine our canoe-builder, for instance, become 
so prosperous that he can afford to sit in the shade and to 
hire, with a portion of the rentals drawn from the canoes 
already in use, canoe-builders and repairers to work for 
him daily. These men receive wages for their daily 
work. It is ordinarily supposed that, in simple justice, 
they receive the value which they produce — this value 
being, as in any case, the gross value created minus the 
cost of the '' central-office " direction and accountance. If 
so, then the indebtedness for the original creation of the 
capital is canceled forever there and then, and no further 
just claim for payments of any sort may ever after be 
based thereon. If, on the other hand, interest be a sort of 
deferred payment, to the producer of capital, of that por- 



122 THE COST OF COMPETITION 

tlon of the value which he created which was not paid to 
him at the time when the capital was created, then these 
hired creators of capital are not receiving just wages at 
the hands of their employer; he must be holding back 
something of their value produced, and when it later finds 
its way into his hands he is bound to turn it over to them. 
He cannot pose otherwise than as a trustee. If he holds 
back this portion of their natural wages and does not later 
turn it over to them, then is this merely another way of 
transferring value from its producer to one able to acquire 
It by force of circumstance; that Is to say, the employer 
assumes toward his employee the same attitude as the 
armed hunter did In bargaining with the unarmed fisher- 
man. It Is needless to say that actual interest-payments 
do not pretend to follow these lines of disinterested 
trusteeship at all. They therefore must not lay claim to 
the principles lying back of them. 

(4) The final point of significance as to the nature of 
interest Is that the great bulk of capitalism upon which 
interest Is now being drawn never was created by the 
capitalist at all. It was won by barter or was Inherited. 
Therefore the question as to the true nature of the capital- 
ist's proper income: interest, — whether rightful or the 
opposite, — turns upon the value to the community of the 
Capitalist's mere suzerainty of these replicas of Inven- 
tion's novelty, which were produced by Labor and acquired 
Into legal ownership by the Capitalist by methods yet to 
be explored. 

All of these considerations unqualifiedly Identify capital- 
ism and the collection of Interest as a species of barter. 
The points of coincidence whereby this identity are estab- 
lished are: 

(i) It has nothing to do with Production. Capital 



SPECIALIZATION IN BARTER 123 

has, but Capitalism has not; and the capital is furnished 
by Labor, not by the Capitalist. 

(2) Its amount is determined and its payment assured 
solely by might, of legal possession on the part of the 
capitalist and by force of need on the part of the bor- 
rower, the laborer. 

(3) It universally tends to expand against its ultimate 
limit: the ability of the user to make the interest-payments 
and still earn wages slightly better than what he might 
earn without the capital. 

Therefore capital and interest-drawing will hereafter 
be regarded as merely one form of barter or competition, 
and will be understood as included within those terms. In 
capitalism the competition is between classes, the capitalist- 
class vs. the borrowing (or producer) class, instead of 
between trades or between individuals, as were the two 
forms of competition already discussed. We shall con- 
trast the former with the latter by the terms vertical and 
horizontal competition, respectively; but except for this 
difference in relative position of the contending parties the 
two forms of competition are identical in nature. 

These statements have not been founded at all, It is to 
be noted, upon any denial that labor is better off with 
capital, even under capitalism, than it was previously. It 
merely denies the self-righteous explanation of interest as 
an institution warranted by considerations of justice. The 
existence of capital, — the material tools used by the pro- 
ducing laborer, — is warranted by its beneficent effect upon 
general and individual productivity. The existence of 
capitalism is not warranted by any consideration except 
that we do not know how to get rid of it. That the incre- 
ment in productivity due to the use of capital should go 
back to the capitalist, either in whole or In appreciable 
part, as a matter of justice, is denied in toto. It comes 



124 T'HE COST OF COMPETITION 

back to the capitalist, In large part, simply because he can 
make It come back. All pretense that he, purely as a 
capitalist and not as a laborer specialized Into superintend- 
ence, either produces this Increment himself, or that he 
himself aids labor to produce It, Is absolutely without 
foundation — as will appear even more clearly as the analy- 
sis develops. 

As with many other pairs of activities between which 
sharp contrast is to be drawn, these of the creation and the 
ownership of capital, or of the use and the ownership, may 
both find expression, at times and in part, within a single 
individual. Such an one may devote a portion of his 
time to each of the two; or here, since one " activity " is 
idleness, — the activity consisting solely In the consumption 
of wealth produced by the activity of others, a negative 
activity, — all of his time may be absorbed in productive 
labor, for which he enjoys full return In the form of 
*' wages," while the Income from his ownership of capital 
comes quite in addition to that. 

If it be urged that the capitalist runs constant risk of 
not being able to obtain profitable Investment, or to 
liquidate his capital Into its orglnal money-value upon 
need, owing to constant fluctuations in commercial valu- 
ations, the reply Is threefold: 

( I ) The individual's voluntary risk Is of no value to 
the community and there Is no reason why it should reim- 
burse him therefor. Piracy runs risks, in prosecuting its 
business upon the high seas, — of a gallows erected by its 
own lawlessness. So does anarchy. In handling dynamite. 
The burden of proof remains upon the capitalist to show 
how his risk aids the community. It is of his own making 
and his own choosing. If he had sold his capital for cash 
at the time of its first creation, not attempting to keep it 
for the sake of prying interest out of other people's pockets 



SPECIALIZATION IN BARTER 125 

with It, there would have been incurred no risk of losing 
it. The risk would then have been distributed over the 
entire community and have become insensible. 

(2) The risk Is not so great but that (a) it Is over- 
balanced by the average rate of Interest, so that there 
always results to the capitalist, In the long run, a hand- 
some net income; and but that (b) capitalism steadily 
accumulates; that is, that the capitalist enjoys the situation 
and constantly seeks to accentuate it. 

(3) The risk is Incurred solely because It Is the aim 
of all barter to fluctuate prices, and because all capitalism 
and all barter are operated upon the principle of cannibal- 
ism. That Is to say, if one capitalist should find at any 
time that his capitalism had depreciated, or flown alto- 
gether, it could be only because he had taken too heavy a 
pirate's risk and attacked too powerful or too empty a 
galleon, or because some other capitalist or barterer had 
caught him napping and had gobbled him up.^ 

1 If the question which must be answered ultimately: What is it which 
determines, in actual life, which individual is to be the capitalist, absorb- 
ing interest, and which the non-capitalist, paying it?— if this question is 
to be given its preliminary answer here, that answer may be founded 
upon what has just been said. With the great majority of self-respecting 
individuals of cultivated taste, barter and capitalism still savor far too 
strongly of the methods and manners of eighteenth-century piracy, not to 
mention the cannibalism of a still earlier period, to permit them to enter 
Into It with that zest which alone commands success. We have outgrown 
the institution barter, not only as a unit-nation, but as a question of indi- 
vidual taste. Such individuals, therefore, chooSe instead either honest, 
honorable toil or some one of the equally honorable professions. That 
these classes include the ablest and most valuable citizens the country 
possesses, whether measured by economic or by ethical standards, cannot 
be proven here. But the question is not dodged nor minimized, and is 
given full treatment later, in its proper place. In fact, since it is the test 
of value of all studies In sociology that they shall reveal the destiny of 
the Individual, it is the main object of this book, ultimately, to bring out 
this very fact: that our most valuable citizens are amongst those who fail 
to accumulate capitalism. 



126 THE COST OF COMPETITION 

The situation In the illustrative community of fisher- 
men, after the advent of capital and the capitalist, Is there- 
fore four-sided. First comes Labor-Specialized-upon- 
Fishlng, which can produce more with the canoe than with- 
out It. Next comes Invention, which has created by past 
effort the Idea which constitutes the difference In value of 
Labor's productivity with and without the canoe. Inven- 
tion Is therefore one form of specialized productive labor: 
Labor-Specialized-upon-Invention. Kext comes Labor- 
Specialized-upon-Canoe-buildlng, which would ordinarily, 
or in natural justice and freedom, exchange, with permis- 
sion from the Inventor or after proper payment of his 
value-produced to him, with Labor-SpecIalized-upon-FIsh- 
ing at the natural price. Finally comes the Capitalist, 
producing nothing currently, nor trying to do so, but own- 
ing replicas of Invention's novelty, for the use of which 
Labor prefers to give him the bulk of the increased value 
produced with Its aid (instead of giving it to Invention, 
who is unable to enforce its payment to him) rather than 
to get none of it by refusing to use the canoes at all. 

The natural and the artificial relations of these four 
Individuals or classes is shown in Figs. 3 and 4 respectively. 
In them, P^ represents productive labor specializing upon 
the transformation of the raw material itself Into finished 
articles fit for human consumption; Pg represents produc- 
tive labor specializing upon the supply of the tools, or 
capital, used therein ; I represents Invention and C capital- 
Ism. Fig. 3 shows the first three in their natural associa- 
tion, each credited with the value he produces and coopera- 
tively exchanging this value with the others in order to 
produce a complete net result for life and progress. If 
w^e call, for the purposes of Illustration, the proportion of 
the selling-valuation of that net result which Is accorded 
to labor, as wages, as the net result Itself, neglecting for 



SPECIALIZATION IN BARTER 127 

the time any question as to their actual identity, then it 
may be said that this is exactly what occurs in every fac- 
tory possessing a tool-maker and a designer. Pi is the 
operative, Pg is the tool-maker and I is the designer for 
both. Under the guidance of the Central Office, which 
keeps a record of the average productivity of each, they 
exchange cooperatively, upon the basis of natural^ price, 
with no consciousness of either capitalism or barter in con- 
nection therewith. And the Central Office is itself a part 
of the wage-earning labor-body, a portion of Pi- In so 
far as ail questions of human nature are concerned, it is 




Fig. 3. Natural Coordination 

not only true that such method of exchange is perfectly 
feasible, but it is an existent fact that it is the only one now 
known in the daily lives of some ninety per cent, of the 
individuals now carrying on all productive industry. 

Bringing the question of capitalism again into the situa- 
tion, however, \t is to be recalled that capitalism intervenes 



128 



THE COST OF COMPETITION 



between the three, although they are quite unconscious of 
it in their daily tasks, in every exchange which they make 
with each other beyond the factory-walls. Neither di- 
rectly nor indirectly, visibly nor obscurely, do they barter 
with each other ; but at every such exchange between them 
arises the opportunity of the Capitalist to barter, to put 
the interest-extractive pressure upon them or upon the 
public: with what effectiveness, although little time Is 
visibly spent at It, will be developed as the analysis pro- 
ceeds. These actual relations are shown by Fig. 4. 




Fig. 4. Coordination Distorted by Capitalism 

Here capitalism intervenes between one portion of labor 
and another, or between either and invention, in whatever 
exchange between them Is essential to industry and pro- 
gress. The exchange takes place anyhow ; it must, or the 
specialization and cooperation of the three must cease. 
But It Is now warped from its naturally straight lines of 



SPECIALIZATION IN BARTER 129 

communication so as to pass within the control of capital- 
ism. As it does so the value of the exchange is tapped 
for the income which capitalism enjoys : Interest. 

Summary. In view of all these considerations the fol- 
lowing principles of equity are laid down as axiomatic: 

(i) The only return honestly earned in the original 
production of capital is that reserved to any other form of 
productive labor, viz.: the value produced. This once 
conserved to the producer by the community, in a single 
net payment for a given lump of material capital pro- 
duced, any demand for a second or a greater payment, or 
for a series of current payments, such as interest, amounts 
to extortion pure and simple, — under what pressure will 
be seen later. 

( 2 ) The gain In productivity of labor due to the exist- 
ence of capital, over what it was without it, if to be divided 
by Labor with anyone, should go in part to the Inventor, 
as to another form of productive labor; but the question 
as to what portion should go to each is here deliberately 
neglected, as irrelevant to the main question. 

(3) The doctrine that Interest is earned by current 
service performed for society by the Capitalist will not 
bear investigation. In the first place, the interest is paid 
only during those periods when the Capitalist is idle ; and 
value cannot be produced, and if not produced is not 
earned, by idleness. In the second place, the ownership 
of capital is retained by the Capitalist at his own behest, 
as a privilege, solely for the purpose of drawing the income 
under discussion, and not as a patriotic or philanthropic 
piece of self-sacrifice. For instance, the chief source of 
our present municipal corruption is the enormous sums 
which the Capitalist is willing to spend for the privilege 
of owning the productive capital used by labor in main- 



I30 THE COST OF COMPETITION 

taining urban transportation, the supply of gas and elec- 
tricity, and similar public services. If the canoe-owner 
had so much desired to benefit either the individual fisher- 
man or the community with his canoes he would have sold 
them to the one or the other for their equivalent in fish, as 
soon as built; for he would then have received, in consum- 
able form, the full value of his labor, the value produced, 
and could therefore hardly pose as an altruist; while the 
utmost service which he could perform for society and for 
which he could equitably ask pay had then been done. 

In actual life to-day the same thing is true : the greatest 
service which the capitalists might do for society would be 
to sell their capital to the community immediately, instead 
of holding it for the purpose of drawing interest, and to 
cease to be capitalists. But this is the last thing they wish 
to do. If Mr. Carnegie would only cease presenting to 
the people, in the form of libraries, a portion of the 
millions which his ownership of his steel-works pries out 
of them, and would give or sell to them the steel-works 
instead, he might have a better chance than now promises, 
at the needle's eye in that dread hour which all must meet : 
when, as he says, to be rich, to own capitalism, is to be 
disgraced. 

It may be replied to this that it were futile for Mr. 
Carnegie to so present his steel-works to the American 
people, for their value would soon be dissipated in the 
hands of the politicians. What is the objection, then, to 
Mr. Carnegie's presenting himself to his country, along 
with his steel-works? He has handled them most effec- 
tively, in the past, for the purpose of raising and maintain- 
ing the prices of steel, — that being the sole measure of 
success in private capitalism. Why could he not be 
trusted to handle them just as effectively, in the future, 
for the depression of steel-prices to the natural cost of 



SPECIALIZATION IN BARTER 131 

production? — were It only once understood, In the minds 
of all of us, that the works were to be owned by and run 
In the Interests of the American people, and that his sole 
pride of success lay In accomplishing that public good to 
the utmost ! Could we not well afford to voluntarily pay 
him then a fixed annual salary of $1,000,000, twenty times 
what we pay our national executive, one-twentieth of what 
Mr. Carnegie's capitalized steel-works now squeeze out of 
us by force? Could we not then build our own libraries, 
to fifty times the present scale of construction, and cement 
them into our community-life with a much better grade of 
public self-respect than now? Could we not then live upon 
that modest Income in sufficient comfort, and with a sus- 
taining honor, finding in both a fair recompense for doing 
what Lincoln did for a few thousands only, and what 
Washington did for '' the empty honor " alone, viz. : to 
serve his country with a single eye to Its welfare as a 
whole? When Mr. Carnegie shall have honestly an- 
swered these questions to himself he need no longer dread 
the straight and narrow passage through the needle's eye. 
He will have already passed through, and with what tra- 
vail none but he shall ever know. 

(4) The Immorality of the practice of interest-drawing 
is obvious from the premium which It places upon idleness. 
The privilege of drawing interest never persuaded any- 
one, successfully, into productivity. It persuades them 
directly away from productivity. Into barter; and when 
barter has accumulated enough, away from barter into 
idleness. No one who has spent his life In production 
draws an appreciable Income in the form of interest. Not 
even inventors, according to Mr. Edison, ever make 
money by inventing; they make it, if at all, as business 
men, by successful barter over their inventions. Every 
existing income of appreciable size which consists of Inter- 



132 THE COST OF COMPETITION 

est upon invested capital is drawn from a fortune originally 
accumulated by barter. 

The simple fact is, the exaction of Interest from Labor 
for the use of capital is a parasitical process attaching it- 
self to the Exchange between Labor-Specializing-upon- 
Tool-making and Labor-Specializing-upon-Tool-using, 
exactly as Barter is a parasite upon exchange between 
labor using one sort of tools and raw material and labor 
using another sort. The characteristics of the two para- 
sites are exactly alike. Every generalization or law pre- 
viously stated or hereinafter to be deduced in relation to 
barter holds equally true of the drawing of interest from 
the idle ownership of capital. The pressure which is, put 
upon productive labor to give up this strength to the para- 
site is exerted in a different fashion, to be sure, but the 
difference is in form only. In barter it falls directly from 
the barterer upon the laborer; in capitalism it falls indi- 
rectly, and therefore more obscurely. But it is the same 
force in each case. 

Rent. Into exactly this same classification, too, falls the 
income, scientifically defined as rent, which is secured by 
the idle ownership of 

Land 

Land possesses value for the purposes of either manu- 
facture or residence, quite aside from any artificial im- 
provements which may have been imposed thereon by 
labor, in either or both of two ways: 

( 1 ) By its geographical or topographical conforma- 
tion ; 

(2) By its relation to the artificial improvements and 
the current exertions of Labor upon adjacent land. 



SPECIALIZATION IN BARTER 133 

Neither of these Items can be altered by any effort upon 
the part of the occupier of the land. The second one can 
be, and normally always Is, markedly altered by labor, but 
it Is by that of the other members of the surrounding com- 
munity. Therefore there is no reason why either of these 
two values should be conserved to the occupier, as his 
property, by law. Thus, to manufacture Iron is needed 
a locality whither coal and ore can easily be brought and 
whence iron can easily be shipped: all, presumably, by 
water. This facility, aside from any improvements for 
navigation attained by the expenditure of labor and which 
would constitute capital, is unalterable. The value which 
attaches to a locality In view of these facilities is quite dis- 
tinct from the value due, for instance, to contiguity to a 
great city; for this latter value is markedly alterable by 
those who build the city, whereas the former Is not. The 
larger and the nearer the city is built to the locality In 
question, the greater becomes the value of the latter as 
land; yet in the production of this value the iron-manufac- 
turer, as such, could have no part. 

Reverting to the law of decreasing returns, It will be 
remembered that the greater the population supported 
upon a given territory by the parallel exertion of similar 
effort, the poorer would become the later portions of land 
drawn into service. The latest comer would take the 
poorest land because it were the best available. But it is 
to be plainly noted that standards of ethics take no cogni- 
zance of priority of birth or of occupation by force. The 
law of the land does, it is true, but It Is justified therein by 
no standards of equity recognized by the broadest inter- 
pretations of the Christian faith. To push in ahead of 
the weak, and then to claim protection as one in the right, 
is the policy of ruffianism or of thoughtless childhood, but 
not of Christian men and women. So far as natural law 



134 THE COST OF COMPETITION 

is concerned, on the other hand, the true method is always 
just the opposite: the later form of life is constantly and 
rightfully overruling and displacing the earlier, securing 
and utilizing its opportunities by newer, better, higher 
methods of life. As the Scripture saith: " And the last 
shall be first." 

Therefore, the least which society can properly do in 
this connection is to recognize that the lateness of arrival 
of him to whom is allotted the poorest land is an event 
which cannot in equity be either charged against him or 
credited to anyone else. Whatever it may bring to the 
community, of good or bad, is a community-event, to be 
shouldered by it as a unit. 

Or, to take a more religious view of the case, mankind 
finds itself relying upon the land for life as a fact of 
God's creating. God gave to man the land, to dwell upon 
in peace and justice. Therefore, since the Christian faith 
makes no distinction between individuals, in its value each 
possesses an equal right, as a birth-right. 

From either standpoint, the only rightful basis for the 
legal distribution of land-values is to consider each citizen, 
by right of birth, as an equal share-holder in the value of 
the total land available, although its actual occupation 
may be taken up and enjoyed by the different members of 
the community in the most diverse fashion. Its average 
productive power per acre per capita would then constitute 
the natural rent of land, or the value assignable to each 
citizen as his share. Since each enjoys the use of land to 
some other quantity or value than this, — greater or 
smaller, at his pleasure, — if its current productive value 
be greater than the natural rent, he owes the surplus to the 
community; if it be less, the community owes him the dif- 
ference. These two sums of debits and credits are of 
course equal, and balance each other. The community 



SPECIALIZATION IN BARTER 135 

stands merely as a clearing-house for the transfer of value 
from those who enjoy more than their proper share of 
land-value to those who enjoy less.^ 

Upon this natural relation between the community and 
the individual In regard to land is superimposed the arti- 
ficial device called the legal ownership of land. In its 
relation to the natural attitude between citizen and citizen 
it stands in exactly the same attitude, and exists for exactly 
the same purpose, as does barter in regard to one sort of 
exchange and capitalism to another: as a parasite. For 
natural rent is, of course, merely one form of Exchange : 
that between Labor Specializing upon Land-using and 
Labor Specializing upon Tool-using. Since land, as well 
as labor, produces value, exchange is necessary in order to 
circulate that value throughout the community. The 
only natural and equitable m'ethod of effecting this ex- 
change is by natural rent. But in this exchange selfish- 
ness sees again an opportunity for the gain of wealth with- 

2 It is this natural rent for land which underlies Mr. Henry George's 
single-tax plans. As to the practicability of those plans for attaining the 
payment of a natural rent in actual life, or of any substitute plans, the 
writer wishes to raise no question whatever at present. He wishes merely 
to point out the existence of such a rent, as the only natural and just one, 
whether practicable or not, and as the only one upon which can be based 
an accurate analysis of the equities and inequities of modern industry. 

To grasp this clearly it is necessary to point out, as Mr. George did not, 
that the average net rent of the community, viewed in this way, must be 
zero. That is, since the advantage of using land of high value does not 
stay in the hands of the user, half the community would choose to occupy 
land of inferior value and to receive from the other half, occupying the 
more valuable land, their share of its productivity. The former half 
would "pay" a negative rent. 

The whole proposition depends upon a recognition of the principle that 
the land (not its improvements) belongs to the community and cannot, by 
any distortion of the idea of equity, really " belong " to any individual : a 
principle so axiomatic in its fundamental justice that it receives to-day 
practically universal acceptance, although the practicability of incorporat- 
ing it into workable statute law is almost as widely rejected. 



136 THE COST OF COMPETITION 

out the labor of creating it, by the taxation of exchange. 
By creating a legal fiction called a title to the land It is 
able to distort the payments for land-use away from the 
natural rent Into a greater commercial rent, and to thus 
divert into its own pocket the difference. This last is the 
maximum which Labor-upon-Land can consent to pay and 




Fig. 5. Natural Coordination 

still derive a net benefit from the land sufficient to persuade 
It to continue tenancy. 

In thus securing something for nothing and in thus 
" charging all the traffic will bear," landlordism Is 
exactly like any other sort of capitalism; and both are one 
form of barter. Between capital and land,^ both of them 

3 Upon this distinction between land and capital: that one is made by 
God and the other by man, Mr. George bases all of his distinctions be- 



SPECIALIZATION IN BARTER 



137 



material things, — one being artificial and the other nat- 
ural, — there is a wide economic difference, to be sure. 
Between capitalism and landlordism, both of them legal 
artifices, there is no difference whatever, either in principle, 
method or result. 




Fig. 6. Coordination Distorted by Capitalism and 
Landlordism 

To illustrate this relation. Figs. 3 and 4 are here 
expanded into Figs. 5 and 6, which give respectively the 



tween landlordism and capitalism. From it he deduces all of his conclu- 
sions as to the former being the source of all of our social evils. That 
Mr. George is right in condemning landlordism I am very glad to uphold. 
In fact, to his clear-headed work up to this point I am myself much in- 
debted for a correct start through the maze. But to the remainder of 
his conclusions this entire volume takes the broadest exception. 



138 THE COST OF COMPETITION 

natural and the artificial relations in exchange between 
labor specialized in different directions when the questions 
of land and landlordism, as well as capital and capitalism, 
are added to the question. In them, L represents land- 
value and R commercial rent or landlordism; the other 
signs are used as in Figs 3 and 4. The same distortion 
of the natural path connecting land with labor in exchange, 
so as to lead it within the control of landlordism, occurs 
here, as is shown (in both pairs of figures) between the 
Invention and production of capital and the labor which 
uses it. Both of the former can reach the Labor engaged 
in making actual, consumable commodities only through 
Capitalism; the Labor using land can reach any of them 
only through Landlordism. 

Before further progress can be made in the analysis of 
social energetics a summary of what has been accomplished 
must be presented, in the form of a series of definitions. 
Those of Production (see page 28) and Barter (see pages 
69, 73 and 95) are not repeated here. 

Land-value or Natural Rent is definable as the cur- 
rent ability of a given piece of ground, due {a) to its 
topography and (b) to Its geographical relation to the 
labors of the community, to support life. There is no 
possibility of equating land-value with labor-value, nor nat- 
ural rent with wages; they can he expressed only compara- 
tively, in terms of the life-supporting ability {under like 
labor) of other portions of land. This is why the net 
average natural rent must be zero: In order to eliminate 
land from the equation of labor-values entirely, leaving 
the latter free for equation without the presence of an 
unknown quantity. Land-value or natural rent excludes 
all consideration of artificial improvements upon the land. 



SPECIALIZATION IN BARTER 139 

Landlordism is the legal, idle ownership or control of 
land, with the enjoyment of its commercial rent. It is one 
form of Capitalism. 

Commercial Rent is the excess over natural rent of the 
current payments exacted from Labor by Landlordism for 
the use of the land. It is a tax imposed upon exchange 
between those using the land in one form of production 
and those prosecuting production in other forms or locali- 
ties. In this it is one form of Barter. 

The term rent is often used, in actual life, to include 
payments made for the use of buildings or land-improve- 
ments; but these latter are not true rent at all, but are 
interest paid upon Capitalism. 

Capital Is the material product of labor which is uti- 
lized by labor in the further production of value. 

Depreciation Is the natural and Inevitable loss In value 
of capital with time and use. It must be made good by 
Labor using capital before exchange with other lines 
of production can be effected. 

Capitalism Is the legal, Idle ownership of capital, with 
the enjoyment of Its artificial net income: Interest. It is 
almost one with Landlordism. In fact, the word capital- 
Ism will usually be used, hereafter, to include both ideas.* 

Interest Is the surplus over depreciation collected by 
the idle Capitalist for the privilege of use of his capital 
In production by Labor. It is a tax upon Exchange 
between the value thus produced and other forms of value. 
In this it is one form of Barter, 

4 Capital and capitalism must never be confused. Capital is a material 
thing, a tool, and can originate only in productive labor. Capitalism is 
an institution, a legal artifice, and originates, in the great majority of 
cases, solely in barter. 



I40 THE COST OF COMPETITION 

The Two Economic Divisions of Society 

From these items thus defined, with the others given in 
previous chapters, may be built up the complete anatomy 
of the modern economic organism. It appears in a dual, 
Janus-faced form, as displayed on pages 142 and 143, 
each aspect arrayed under its characteristic cognomen; 
viz. : Production and economic Dissipation, respectively. 

Economic Dissipation. These two terms. Produc- 
tion and Dissipation, are strongly contrasted in their eco- 
nomic significance. The first of these terms we are now in 
a position to well understand. It was defined on page 28, 
and the discussion since then of the phenomena of special- 
ization and coordination must have given it a clear light. 
The significance of the second of these terms is only now 
about to be brought out. It will first receive preliminary 
definition as covering all economic activity not productive 
of value. Its complete definition, even in outline, can be 
had only from the two following full-page tabulations of 
the characteristics of production and dissipation respec- 
tively. Its full comprehension can be had only after the 
most exhaustive discussion and deliberate reflection. 
This one volume alone, while devoted especially to this 
task, is altogether incommensurate with its size, its intri- 
cacy or its importance. 

In the following exhibit there is only one item which 
calls for immediate discussion. This is the statement that 
Production consists solely of the overcoming of material 
or brute obstacles, while at the same time superintendence 
is included in Production. Many a man who has engaged 
more or less in superintendence will say that it consists 
largely in overcoming human obstacles, 



SPECIALIZATION IN BARTER 141 

The case well illustrates just the main point which is 
sought to be brought out, in one of its more obscure occur- 
rences. The superintendence of to-day combines two dis- 
tinct duties : 

( 1 ) The organization and education of labor of an 
inferior, degree of intelligence into the maximum possible 
efficiency ; 

(2) The exhortation or compulsion of labor which has 
already contracted to perform certain duties at an agreed 
price to fulfillment or over-fulfillment of its agreement. 

The first is purely productive effort. It naturally 
should, and it usually does, meet with the heartiest 
cooperation on the part of subordinate labor; the under- 
standing of the laborer may sometimes be small, but the 
spirit is willing. Whenever this is not so it is because of 
the constant presence of (2) and its association, in the 
mind of the laborer, with the superintendent's every effort. 

The second is purely barter in character. The work 
was agreed upon at a fixed price per day. In reaching 
that agreement the laborer is at all times conscious of the 
fact that the wage is low because its every diminution goes 
into his employer's pocket; what he doesn't get as wages 
the employer gets in the form of profit. He accepts 
because he can get no better. He knows, too, that the 
less which he does per day for a given wage, all of 
his class uniting in the same policy, the greater will be the 
wage per day. (For the proof of this statement see pages 
155 to 192.) All of these ideas unite to form in labor's 
mind a most natural antagonism to the desires of any 
agent of its employer's interests; which, for this portion 
of his time and effort, the superintendent is. The laborer's 
will therefore assumes an attitude of resistance. He 
embodies psychologically for the first time (and therefore 
gets the blame for) what the wage-system has embodied 



142 THE COST OF COMPETITION 

DIVISION I 

PRODUCTION 

The CREATION of VALUE: 

By the Transformation and Transportation 



Of Raw Material, viz.: 
With the use of Capital, viz.: 

In the hands of Labor^ viz.: 



In Specialization and Co-oper- 
ation : 



Through the medium of 

From the Natural Sources 
of Value, viz.: 



Stock and 

Incidental Current Supplies; 

Improvements on Land, Buildings, 
and all Tools, including both 
Hand-tools and Machinery; 

Productive Labor proper, unskilled 

and skilled, 
Labor devoted to balancing Depre- 
ciation, and 
Superintendence, including 

Organization and Direction, 
Design, and 
Invention ; 

Among a host of Trades, Arts and 
Professions (excluding only Civil 
Law) ; 

Exchange ; 

The Field, the Forest, 
The Mine and the Sea; 



To its Natural Destination, viz. : The ULTIMATE CONSUMER. 
It consists solely of the overcoming of 

Natural, Material, Inanimate or Brute Obstacles. 
It brings to each Worker, in so far as it is uninterfered with, 

What He Produces, 

except as he may choose to divide with the Incapables: The Sick, the 
Maimed, the Insane, the Orphans, the Criminals, etc. 
It is devoted solely to 

The SUPPORT of HUMAN LIFE and GROWTH, 
and is the sole means to that end in the possession of Society. 



SPECIALIZATION IN BARTER 143 

DIVISION II 
DISSIPATION 

The CONTROL of VALUATION: 

By Barter or Competition over the 
Price or Opportunity 
Of Raw Material; 

Of Land, viz.: Geographical Site; 

Of the use of Capital, viz.: Improvements on Land, Buildings, 

Tools, Machinery; 
Of Partially Completed Prod- 
uct; 
Of Labor exerted productively 
with and upon the foregoing; 
and 
Of The Final Product; The Value ultimately reaching the 

World of Consumers, for the Sup- 
port of Human Life and Growth; 

By Taxing Exchange between any two of these six foregoing items, 
With the aid of Landlordism: The legal, idle Onvnership of Land; 
With the aid of Capitalism: The legal, idle Ownership of Capital; 
With the aid of Barter pure and simple, viz.: The active diversion 
of Market-Prices, whether of Commodities or of Labor, away 
from the Natural Price; 
In Civil Controversy: Between a Host of rival Dealers, Salesmen, 
Agents, Corporations, Trusts, Syndicates, Promoters, etc., and their 
Assistants: the Civil Lavoyers. 
It consists solely of the overcoming of 

The Resistance of the Human Will and Intellect, 

By means of Skillful Persuasion, 
Of Misguidance by Half-truths, 
Of Downright Deceit, 

Of the Exploitation of Discomfort and Duress, Pride and Fear, 
Of the Active Creation of a Deforming Pressure against True and 
Normal Life. 
It is devoted solely to the transfer to each Devotee of a portion of the 

VALUE WHICH SOMEONE ELSE has PRODUCED, 
It concerns solely the 

Distribution Among Individuals, 
and not the 

Creation 

of Value. It does absolutely nothing for 

THE SUPPORT of HUMAN LIFE and GROWTH. 



144 THE COST OF COMPETITION 

causatively as a fundamental institution in our static law, 
viz. : antagonism of interests as the sole guide in the dis- 
tribution of wealth. This resistance constitutes Labor's 
chief method of barter, whether displayed at the moment 
or deliberately systematized in organized effort, in strike 
or boycott. In this sense the laborer as well as the super- 
intendent spends a portion of his time in barter; but it is a 
very small portion of the whole for the former.^ 

Economic Production and Economic Dissipation. 

In the light of the above exhibit it is proper to repeat 
our definitions of Emulation and Competition in final 
official and expanded form and to show their identity, 
as psychological impulses, with the two broad divisions of 
economic activity into which we have just seen the indus- 
trial and commercial world to be divided, into Production 
and Dissipation, respectively. At the same time the 
demarcation between the two divisions in the familiar 
affairs of everyday life may be made more plain. 

Emulation is the rivalrous spirit finding expression in 
increased Activity of Production of Value. 

Competition is the rivalrous spirit, and also the resultant 
act, when finding expression in increased Intensity 
(but not necessarily activity) of Barter over Valuation. 
It is antagonism in the determination of market-prices. 
It includes all activity expended in influencing the direc- 
tion of demand (ordinarily called "finding a market") 
so that purchasing-power which might be expended upon 
a competitor's goods, or upon some entirely different com- 
modity, is diverted into one's own direction. It includes 
all rigidity of purpose, when evinced in the idle ownership 
of land or capital, aimed toward the restriction of the 
use of these necessary adjuncts to the production of value 

5 For a continuation of this topic see pages 244 and 504. 



SPECIALIZATION IN BARTER 145 

by labor and to labor's exchange with the consumer, to 
the end that both laborer and consumer will be ready to 
pay a greater tax for the privilege of their use. It 
includes : 

( 1 ) All commercial negotiation f 

(2) All but a mere tithe of all advertising;*^ 

(3) All commercial traveling, solicitation and com- 
mission-agency, and all commercial correspondence carried 
on with the same in view; 

(4) The activities of all combinations of individuals 
looking to the wielding of greater power against their 
economic adversaries, such as corporations, consolidations, 
trusts, pools, and lock-outs; all labor-unions, strikes and 
boycotts ; 

(5) All employment or sale of labor, in the sense of 
the negotiation of an agreement preliminary to going to 
work, or of the reopening of that contract at any future 
time ; 

(6) The promotion and financing of all commercial 
enterprises, old or new, except pure invention, and hence 
nearly all banking, all brokerage, and all insurance, mort- 
gage and pawn-shop loans; 

(7) All stock-manipulation, trading or gambling, 

6 A great deal of such negotiation, especially in retail trade, Involves 
the communication of information concerning quality, etc., of goods. In 
so far as the information thus contributed is true and reliable, and is 
known to be so with that confidence on the part, of the recipient which 
alone can make it of use to him, it is productive . of value and its cost 
should be classed with Production. But it is plain that such a process 
is always preliminary and incidental to and quite distinct from true 
negotiation, which consists purely of the discussion of price. 

"^ The reader who is inclined to question the validity of including 
advertising as a non-productive species of effort is referred to a discussion 
of this topic on pages 170-175. The question naturally arises at this point 
in the analysis, but its answer is preferably deferred until some further 
definitions can be introduced. 



146 THE COST OF COMPETITION 

whether on 'Change or in the prosecution of one's private 
business; 

(8) All expenses for corporation-law or commercial 
counsel, for lobby or for " influence "; 

(9) All civil suits looking toward the settlement of 
disputes as to valuation or ownership, which includes all 
civil law; 

(10) All multiplication of accounts because of any of 
the above; 

(11) All cost of employing, organizing and superin- 
tending all assistant labor directed into the furtherance 
of the above processes. 

The Homogeneity of Competitive, Dissipative 
Effort. The classification just listed includes within 
each class industrial activities which bear, superficially, the 
greatest dissimilarity. Yet it has been the office of the 
preceding pages to demonstrate that in their inherent 
nature they are alike. It will be the office of later pages 
to prove that they are properly to be styled as dissipative, 
and that in their effects upon the individual and the com- 
munity they are also alike. They together constitute a 
single homogeneous institution. In all following analysis, 
therefore, it will be taken as demonstrated that it makes 
not the slighest difference in the amount of the evil 
wrought, but merely in the form of its detail, whether 
the competition under discussion makes use of land-values, 
capital, the circulating medium, the opportunity of daily 
labor, a market for material commodities or the most 
impalpable of personal forces promotive of progress, as 
the basis for its negotiative and dissipative activities. This 
position the sequel will be found to uphold. In each of 
these cases the effect upon the community will prove to be 
equally bad. Each is equally responsible. No one of 



SPECIALIZATION IN BARTER 147 

them Is a cause, the rest being effects. All are parts of 
one whole. The remedy to be effected by the removal 
of any one of them will be fractional only, and propor- 
tional to the degree of Its presence. Only the excision of 
Division II In its entirety, from each department of indus- 
try where it appears, can accomplish aught. Finally, and 
most Important, the cure thus accomplished will not be 
coincident with the confines of the excision, thus to be 
identified as its result, but will be almost equally dis- 
tributed, by the fluidity of life, throughout the community, 
so that the Identity of cause and effect will be traceable 
only by the most careful of analyses. Just as the debili- 
tating effect of cancerous growth In the human body Is 
felt In all of its functions, almost regardless of the loca- 
tion of the cancer, so Is the effect of this evil Institution of 
barter, now harbored within each organ of the body poli- 
tic, felt to its uttermost fibre. Just as the removal of the 
cancer relieves the patient from head to heels, so will the 
excision of barter from any one of our economic organs 
lift the brakes from trade and life in all directions almost 
equally. 



VIII 
DISTRIBUTION 

THE wealth of material commodities which sup- 
ports all life, growth and enjoyment for a com- 
munity arises, then, from the efforts of only one 
division of the industrial body: the Producers. By the 
processes of exchange, modified by barter, this wealth is 
divided between, or " distributed " to, the several classes 
and individuals of society for their consumption and sup- 
port. Obviously, all which the Competitive Division 
enjoys is a portion of what the Productive Division pro- 
duced and was forced to share with them. 

It will soon be made obvious that the productive division 
is forced to place its entire product in the hands of the 
competitive division, to receive back again only that 
minimum portion which will persuade it to remain active 
In production. 

If the exchanges were carried on literally, as they were 
Imagined to be In the elementary Illustration of fish and 
hares, the goods being actually brought to market and 
visibly exchanged there, this fact would be much less 
obscure than it is at present. (See page 79.) But the 
complexities of modern industry forbid that simple and 
transparent method. Instead, the device called money is 
Introduced. Each producer exchanges the product of his 
labor for money, which, supposedly at least, undergoes no 
depreciation with time nor loss by subdivision, which he 
can keep and accumulate or subdivide for whatever pur- 
poses in exchange he may be Inclined to accomplish. In 

148 



DISTRIBUTION 149 

this way money Is a tremendous convenience; so much so, 
In fact, that Its presence Is one of the first essentials to 
speclahzatlon. Yet money Itself does nothing. It Is 
merely a certificate of value produced; It can produce no 
value. 

While there are many minor points connected with our 
present supply of money which are Intimately Interwoven 
with and rely upon the distinctions which are emphasized 
In this volume, yet they need not be Introduced Into the 
argument. They stand. In relation to It, In the nature of 
Incidental results, not causes. In the main, money stands 
as stated : as a mere certificate of value produced. When- 
ever and wherever money may appear to be Itself active 
In the extraction of value from the producing classes. It 
Is as a mere Incidental tool In the hands of the bargainers. 
It would be well. Indeed, If the people's supply of money 
might be removed from all Influence of private Interests. 
Yet If this were once done, while It would constitute a gain 
for the people. It would remove from the field of barter 
only one of Industry's tools among ten thousand upon 
which barter Is fastened; and the one, too, with which the 
barterers themselves least like to tamper. The alleviation 
of pressure thereby would be scarcely perceptible. This 
Is the lesson needful to be learned by Mr. Bryan and the 
populists. 

Value and Valuation. The primary factor in the 
exchange of value-produced for Its money-equivalent Is 
the relation between value and valuation. Value Is 
expressible directly only In terms of life Itself, or Indirectly 
In terms of the goods which will support life. Valua- 
tion Is measured In money: gold, we will assume. Gold 
Is merely one commodity among many others, produced 
by labor and having Its comparative valuation based, ulti- 
mately, upon the amount of exertion required to pro- 



I50 THE COST OF COMPETITION 

duce it. Thus, let It be supposed that some discovery, 
such as quartz-milling or a new goldfield, should suddenly 
halve the cost (measured in human exertion) of produc- 
ing gold. Then immediately the prices of all other com- 
modities and of labor would simultaneously be doubled. 
Their mutual comparative valuation (and all valuation is 
comparative) would remain unchanged; that of gold 
would have fallen. All prices (valuations expressed in 
terms of gold) would be doubled; but no life-supporting 
commodity would be harder to procure. 

The Conservation of Economic Energy. The 

aggregate value currently produced hy a community is 
equal to the aggregate valuation currently distributed 
throughout its membership.^ 

1 This equation cannot be written mathematically, because we have no 
accepted unit for the measurement of life. Population is at present our 
only exact measure, and it omits all consideration of comparative worth 
of individuals. As to the basis upon which this last should be estimated, 
that belongs to the department of ethics, not of economics. Even there 
we have no unit of measurement, or rather, no means of applying it. The 
unit accepted by Christian philosophy is the unit of unselfishness: the 
degree to which a given life supports other life, in quantity and quality. 
But this is merely measuring life in terms of life, as we do length in terms 
of length: which was stated at the outset to be the only method possible. 
Moreover, it is very difficult to measure how far one life accomplishes 
the support of other life. Some of the best-intentioned lives not only fail 
to accomplish much in this direction, but they are actually, although uncon- 
sciously, destructive of other lives. On the other hand, some of the most 
effective work in the support of other lives is done by individuals and 
classes which are not now recognized as philanthropic, or even as being 
valuable to the community. Therefore, this equation between aggregate 
Value and Valuation is best left just as it stands: stated in words only. 

It is the prime object of this part of the work to show how far our pres- 
ent economic system wanders astray from its sole reason for existence: the 
support of human life. For that purpose the life of any community, as it 
stands, will be taken as the basis from which to measure departures, with- 
out any further comment upon the comparative worth of different sorts 
of individual life. The life of the community itself, including its self- 
chosen ethical standards, is to be the temporarily unquestioned unit of 
measurement. 



DISTRIBUTION 151 

This law will be regarded as axiomatic. Its substan- 
tiation rests upon the law of the conservation of physical 
energy, of which it constitutes merely one special 
statement. 

Although no statistical proof can be adduced to uphold 
this law, its foundation upon the principle of the natural 
conservation of energy being much more firm, yet it is 
often visible in actual commerce how rigidly aggregate 
value and aggregate valuation (aggregate purchasing- 
power) are linked together. Either may act as a cause, 
the other being limited thereby. Sometimes limited pur- 
chasing-power limits actual productivity; sometimes 
limited actual productivity limits purchasing-power. 
The first is true in hard times, when buyers cannot be 
found and " overproduction " is rife; the second is true in 
" boom " times, when workers enough cannot be found 
and business is hampered by delayed fulfillment of orders. 
In either case the two are equal. 

Price. The outline analysis of industrial activities dis- 
played on pages 142 and 143, including both Production 
on the one hand and Competition or Dissipation on the 
other, covers all of the different sorts of effort now con- 
tributive to the placing in the Consumer's hands of any 
finished commodity and to the determination of the price 
which he shall pay for it. Just as the Producer is the sole 
source of all Value created from the earth, so is the Con- 
sumer its sole destination for final absorption and dissipa- 
tion into dust again. Therefore is the Consumer to be 
regarded as the sole source of that current of Money, 
useful as a certificate of Valuation but otherwise worth- 
less for the support of human life, which flows in the 
opposite direction, from Consumer to Producer, to main- 
tain a record of the life-giving current of Value flowing 
from Producer to Consumer. The price which the latter 



152 THE COST OF COMPETITION 

pays for any article, then, must cover every item of all 
these many sorts of effort. He Is the sole Patron of 
Industry. His money purchases the raw material, buys 
or hires the machinery with which to work It, hires the 
labor to operate It, employs the superintendent or employer 
to supervise the labor, and subsidizes the barterer to 
barter over It. There Is no other possible source of Pay 
for all these things than he. 

Therefore let It ever be remembered, when the price of 
anything In the open market be referred to, that It consists 
of the summation of the costs of all of the items tabulated 
on pages 142 and 143 as making up respectively the two 
Divisions of the industrial body: Production and Com- 
petition, or Production and Dissipation. 

The Inclusion of all of the Items belonging to Division 
I Is actively, though often obscurely, enforced by the 
operation of Natural Law, Inflexible to the human will. 
The Inclusion of all those belonging to Division II is 
actively, though often unconsciously, enforced by the 
operation of Human Law, which Is variable at will. 

The Money-Scale. The ratio existing between the 
aggregate Value and the aggregate Valuation In a given 
community will be called its money-scale of valuation. It 
Is Its valuation of human life expressed in money. The 
lowest terms to which It can be reduced are the daily § 
Income of the "average" man; but In this the word 
average covers such extremes of difference that it is 
scarcely a help to the understanding. 

Into this ratio two factors enter: 

( I ) The average productivity of the individual, taken 
for the entire community. This factor is of use only in 
comparing one community with another. As it is our 
prime purpose to study only the Internal anatomy of any 
given single community, in this case the American nation, 



DISTRIBUTION i53 

this factor will hereafter be neglected, as lying in the 
premises. 

(2) The amount of Competition existing within the 
community; that is, the extent to which Division II appears 
in the community's activities. Since the Value is produced 
only by the Productive Division, while the distribution of 
Valuation takes place throughout all classes, it becomes 
immediately evident that 

The aggregate current Valuation distributed in a com- 
munity is to its aggregate current Value produced, distrib- 
uted and consumed {which ratio constitutes its average 
Money-scale) as its total industrial and commercial effort 
(Division I plus Division II) is to its total productive 
effort (Division I alone). 

To the elaboration and better understanding of this 
law return will be made after considering some further 
necessary definitions. 



Purchasing-Power and Its Social Distribution 

The aggregate Value currently produced by a com- 
munity for its support, and thus made available for dis- 
tribution amongst its several classes and individuals, is 
translated, before such distribution, into Valuation in 
money-form, by multiplication by the money-scale. It is 
in this form that each individual receives his current 
income of purchasing-power. It is because of this fact 
that he commonly looks too closely at the total fund of 
money available in a community, as a measure of its pros- 
perity, instead of at the total fund of Value produced. 
But it is ever to be remembered that what supports life is 
Value only, and that the aggregate current production of 
Money-valuation may be swelled indefinitely, by increas- 



154 THE COST OF COMPETITION 

ing the money-scale of average Price, yet will the com- 
munity be not one whit better off ; indeed, as will be seen 
later, it will be worse off. 

To these several allotments of Valuation, or forms and 
sizes of current individual income, it is convenient to 
assign distinguishing names. This distinctive classifica- 
tion of sorts of income must naturally align itself with 
the classifications and distinctions already listed, of eco- 
nomic activity into Production and Competition and of 
psychic impulse into Emulation and Competition. Upon 
the same basis the total amount of Valuation currently 
distributed throughout the community naturally divides 
itself into two strongly contrasted divisions, namely 
Wages and Dissipation. 

Wages. The income alloted to productive effort, 
whether by class or by individual, is to be called wages. 
The term includes, as well as what are ordinarily called 
wages, all salaries, when paid for pure superintendence or 
for professional work other than civil law, such as in 
education, journalism, histrionics, etc., and all professional 
and artists' fees, again excluding fees in civil law. It 
excludes what are ordinarily called wages when the latter 
are paid for assistance in any of the sorts of effort which 
have been already defined as competitive. 

Dissipation. The income allotted to the bargaining 
division of society, as a unit, will be called dissipation.'^ 
Following the schedule of page 143, it is divisible into 
three several classes or portions, viz. : 

(i) That won by the idle control of land-titles, in so 
far as they affect natural site only, to be called rent, 

(2) That won by the idle control of the legal titles to 

2 The reasons for the choice of this term, and its further definition, will 
be found on pages 162 and following. 



DISTRIBUTION i55 

capital, called " securities," to be called interest. It 
includes all dividends and the so-called " rent " of build- 
ings and land-improvements (which is excluded from the 
technical economic term rent) , as well as what is commonly 
called interest. 

(3) That won by barter pure and simple, active In 
exchange as contrasted with the idleness of landlordism 
and capitalism, to be known as gross profit. 

Individuals engaged in active business and also having 
an owner's interest in the property involved in that bus- 
iness derive an income which is properly the sum of all 
three of these quite distinctive subdivisions, although to 
them it appears as a single net income. A man so situated 
insists upon receiving a greater return for his time than If 
he made the same exertion but owned no property In the 
business. He recognizes that he must be paid, in addi- 
tion to the income won by current effort, the same sums 
which he would receive were his land and his capital bor- 
rowed for use in business by other parties. Or, obversely, 
he is not content to draw from his land and capital, while 
actively superintending their use, only that interest which 
borrowers would pay him while he remained idle ; he must 
have from his business, in addition, the salary which he 
could earn by hiring out his efforts to others. 

If, at the same time, he spends a portion of his time 
and strength in actually forwarding production, an 
accurate analysis of his income must also set apart one 
portion of it as pure wages, although he may receive his 
money quarterly, or even be paid no fixed periodic sum 
at all. 

This illustration Instances the frequency with which one 
man may occupy simultaneously three or four quite dis- 
tinct economic classes, his activities In each having pos- 
sibly the most unlike, or even quite opposite and incon- 



156 THE COST OF COMPETITION 

sistent, effects upon the community. Yet of these funda- 
mental distinctions he is usually quite unconscious. He 
may be accurately likened to the farmer who supposedly 
ran a dairy-farm too ignorantly or too carelessly. It will 
develop, as the argument proceeds, that certain of these 
forms of business-income just listed are, unconsciously to 
their promoters, as baneful to the community as are the 
dairyman's typhoid-germs, and should equally be exter- 
minated by law. This does not mean, whether the individ- 
ual be a dirty farmer, a grasping profit-seeker or a vio- 
lent trades-unionist, that he himself is to be broadly con- 
demned to extermination. Instead, his activities are to be 
sharply differentiated in the public mind, including his 
own, and the law and public opinion are to be so changed 
as to discourage the one and encourage the other, by an 
elimination of the Institutions which have brought the de- 
structive one Into existence. 

Gross Profit, Barter-cost and Net Profit. The 

gross profits, whether referred to the aggregate for the 
community or to those won In any single business, must be 
further divided Into two contrasted portions, each of 
which is received by one of two contrasted subclasses of 
the general Division of the Barterers themselves, viz. : 

(a) The heads or directors of the competitive organ- 
ization, who either alone actually do the negotiating or 
at least monopolize the control and direction of it; and 

(b) A host of assistants who would otherwise belong 
to the productive class, earning wages, but who, because 
their efforts are absorbed by barter, must become classed 
as bargainers. Thus, to illustrate, a printing-shop is 
ordinarily a productive establishment. But If we imagine 
its entire output to be absorbed, In the form of advertis- 
ing-matter, by a captain of barter, the entire printing- 
organization, foreman and journeymen included, becomes 



DISTRIBUTION 157 

enlisted under his banner, aiding him to fight his battles 
with his competitors, and is therefore to be classed with 
the bargainers, although personally these men are entirely 
unconscious of conducting any negotiation. The same is 
true of nearly all stenographers, of the majority of book- 
keepers (those not engaged in shop-accountance of work 
actually done) and of all civil lawyers. Store-clerks and 
salesmen spend a large part of their time and effort in this 
class, by personally conducting negotiation upon a small 
scale or by having their time occupied by the efforts of 
purchasers to buy cheaply. Although they also perform 
the necessary and productive task of parceling out retail 
goods, yet a greater portion of such purchasers are acces- 
sory to negotiative effort than is at first apparent. The 
purchases are made in smaller quantity at a time and at a 
greater number of localities than would be the case were 
all goods known to be labeled with their true quality and 
at actual cost by an agent employed by all of the factories 
at once to represent them impartially to the buyer. Wit- 
ness the dry-goods bargain-counter: three-quarters of the 
effort outside the counter, and its counterpart within, is 
wasted over the uncertainty as to just where may be had 
the most value for a given price. 

The income of these assistants In barter is ordinarily 
known as a wage or a salary or a fee ; yet in reality it is a 
share of the gross profits, and must be named as such. 
Therefore the gross profits are divisible into two portions, 
viz.: 

(a) The income allotted to assistants at barter, to be 
known collectively as barter-cost and Individually as bar- 
ter-wages; and 

(b) The remainder of the gross profits after the deduc- 
tion of barter-cost, to be known as the net-profits, which 
are enjoyed by the true bargainer. 



158 THE COST OF COMPETITION 

It will be noted that the terms " gross profits " and '* net 
profits " possess in economic study a somewhat different, 
although parallel, significance from that given them in 
commercial life. 

Income and Purchasing Power. Viewing the com- 
munity as a unit, the distribution of wealth takes place 
under the following names, viz. : 

( 1 ) Wages, going to the active Producers of Value ; 

(2) Rent, going to the idle Owners of Sites; 

(3) Interest, going to the idle Owners of Capital; 

(4) Barter-cost, going to the active Assistants of the 
actual barterers; and 

(5) Net Profits, going to the active Barterers 
themselves. 

The last four of these sections combine to expand or 
inflate the aggregate Value which is created for the com- 
munity by the Producers (or Section i) alone, and which 
should naturally be exclusively their property, receivable 
as wages, into the aggregate Valuation which is distributed 
to the several classes and millions of individuals compris- 
ing all five Sections, or the entire community-income. 
The share of Valuation reaching each class or individual 
constitutes its Income, 

The share of the aggregate Value available in the com- 
munity for the support of life which this share of the 
aggregate Valuation, or income, will purchase constitutes 
the purchasing-power of the class or individual in ques- 
tion. That is to say, the aggregate Valuation of the com- 
munity currently distributed in the form of wages, rent, 
interest, barter-cost and net profits brings about an exactly 
parallel and proportionate distribution of the aggregate 
Value or Life-support currently available; but in each 
case the latter is less than the former by the ratio existing 
between wages-plus-rent-plus-interest-plus-barter-cost-plus- 



DISTRIBUTION 159 

net-profits, on the one hand, and wages alone on the other. 
The Producers receive less than what they produced by 
this ratio, and the bargainers receive the remainder 
although having produced nothing at all. 

The Economic-Biological Cycle.^ It is the office 
of the human body to absorb material and spiritual 
energy in the form of food, warmth, education, inspira- 
tion, etc., and to develop therefrom, by transformation 
and distribution to the various organic centers, organic 
activity; and it is the office of this activity, under Its own 
automatic mental and moral guidance, to develop from its 
natural environment a fresh supply of food, warmth, 
education, inspiration, etc., to take the place of that 
just consumed. Such a series of processes constitutes 
what is known, in scientific terminology, as an energetic 
cycle. 

Since national life has now developed to a point where 
It Is as Impossible as It Is undesirable for each individual 
organism to create literally what it consumes, thus com- 
pleting the cycle within itself upon a necessarily minute 
and elementary scale, it has become the natural office of 
human society, of the body economic and politic, to dis- 
tribute to the individuals needing it for reabsorptlon the 
aggregate supply of life-support currently created by the 
aggregate community of interactive individuals. To this 
task. Indeed, is now devoted the major portion of the 
Intellectual and nervous strength of the community. But 
the energetic cycle has thereby now become duplex. Upon 
the one side, the biologic is a most Intricate series of 
organic processes whereby material energy is absorbed, 
transformed, distributed and rejected in the several forms 
of bodily energy: muscular, mental and nervous. This 

3 The matter under this heading will be of little interest to those who 
have made no study of the general science of energetics. 



i6o THE COST OF COMPETITION 

side of the cycle is of interest to the biologist and the psy- 
chologist, but not to us. On the other side, the economic, 
counterbalancing that just described, is an almost equally 
intricate series of economic processes whereby muscular, 
mental and nervous energy is absorbed, transformed into 
Value, distributed and rejected to the various individuals 
as material for the next cycle. It is this side of the cycle 
which constitutes our proper topic. 

The Efficiency of the Economic Cycle. Under 
the law of the conservation of energy these two series 
must ever be currently equal to each other, except for any 
dissipation of energy into heat which may occur inciden- 
tally to the conduct of either. When such dissipation is 
absent the efficiency of the cycle will be unity. Otherwise 
it will be less. It can never be greater. 

The form of energy which is absorbable by the human 
organism to the furtherance of life is Value. The poten- 
tial energy absorbed in this form may or may not reappear 
as vital energy. If it all does so, the biological efficiency 
of the individual is perfect; if not, biological dissipation is 
present, either bodily, mental or moral. Such biological 
dissipation is solely an individual phenomenon. It can be 
remedied solely by forces acting through the individual, 
although they may originate and terminate anywhere. 

The form of economic energy which this resultant 
biologic energy again throws back into the economic field 
may or may not be Value. If it is, the life-effort is Pro- 
ductive. If it is not, the life-effort is Competitive, or 
economically Dissipative. Economic dissipation is then 
present. Such dissipation is solely a social, and not an 
individual, phenomenon. It can be remedied only by 
forces acting upon the institutional relations between man 
and man. It is immune against all efforts directed through 
the individual alone. 



DISTRIBUTION i6i 

When neither form of dissipation is present the four 
forms of energy, viz. : 

( 1 ) The Economic Value, potential for life, which is 
absorbed, 

(2) The resultant Life, 

(3) The Economic Value produced by that life, 
and 

(4) The Valuation into which 3 Is converted for dis- 
tribution, as a prerequisite to its absorption again — must, 
under the law of the conservation of energy, all be equal. 
The efficiency of the cycle would then be perfect. The 
goods purchased with the aggregate or average income of 
valuation will support an amount of life equal to that con- 
sumed in their original production. Indeed, in all com- 
munities not stationary or in decadence they will support 
more. Biologic growth, entering between i and 2, brings 
in a coefficient much greater than unity. Men, as maple- 
trees, multiply and develop if properly fed. This Is the 
root of all social health and community-growth. 

Biological and Economic Dissipation. The pro- 
cesses which interfere with this perfection of efficiency of 
the cycle are these, viz. : 

( 1 ) Biological dissipation, occurring between Forms 
I and 3, through 2, of the above paragraph; and 

(2) Economic dissipation, occurring between Forms 3 
and I, through 4. 

Biological dissipation consists in the expenditure of pur- 
chasing-power for, and the consumption of, goods which 
do not develop a commensurate amount of life-activity, 
which may be available for the further equivalent produc- 
tion of value. Such is the case of the sick man who can- 
not assimilate his food, of the well man who buys whisky 
when he needs bread or who commissions a steam-yacht 



i62 THE COST OF COMPETITION 

for his health when what he needs is active outdoor exer- 
cise, such as ditching.* 

Economic dissipation consists in the consumption of life 
in an activity which is not directed toward the creation of 
Value, but which is directed toward the annulment of 
other men's efforts. It consists in a transformation of. a 
portion of the Value of Number 3 (page 161) into heat, 
by friction and Impact, before it can reappear as the Value 
of Number i. Such Is the case with him who receives 
money for other effort In the economic field than produc- 
tive effort, or for none at all. Such Is the case with the 
capitalist class and with all bargainers and their assistants; 
for such is the nature of all of the activities classified under 
Division II in the exhibit of page 143. 

In this case the dissipation of life Is not so obvious as it 
Is in the case of biological dissipation, though none the less 
true. It becomes distinct upon sufficient analysis. In this 
case, the one who produces nothing but the annulment of 
some other man's equal efforts In the opposite direction 
secures, by barter, some of the purchasing-power 

4 Herein is excellent illustration of the difference between Value and 
Valuation. Because of the life which went into the making of the whisky, 
which might otherwise have gone into the production of really useful 
commodities, it possesses a valuation equal to those commodities. But 
while their value, as life-supporters, might be considerable, the value of 
the whisky is almost zero. The same is true of the steam-yacht. Used 
properly, to serve the recreation of men and women truly in need of 
outdoor idleness, because wearied in the work of serving the world, it is a 
matter of value. Used as a means of distraction to a man overburdened 
with effort at amassing unenjoyable quantities of wealth and wearied 
with all the other distractions which money can buy, or as a means of 
display of wealth and power over other men, it is barren of life-promoting 
Value. But in either case it embodies Valuation, because it requires valu- 
able effort to create and maintain it. The same is true of gold. It serves 
a real need of human existence, for the filling of teeth, etc., to just about 
the same proportion of its total production as does whisky as a medicine 
or the steam-yachts as health-givers; that is to say, to an insignificant 
degree. Yet it possesses a very high and stable valuation because of the 
very stable proportion of effort required to produce it. 



DISTRIBUTION 163 

developed by the effort of the producer. Therefore, that 
value properly belonging to one Individual, and commen- 
surate, according to biological equilibrium, with his 
natural Individual productive and consumptive power, Is 
now divided between two or three Individuals. Ergo, 
neither portion can be commensurate with the life which 
commands It. 

If, as Is the case In actual life, one Individual enabled 
by barter to exist without productive effort draws upon 
some nine others, — producers, — for contributions to his 
Income, the former's purchasing-power may considerably 
exceed theirs In amount. For example, following figures 
as nearly representative of current fact as present knowl- 
edge enables, let It be supposed that the aggregate pro- 
ductive power of the nine producers be, say, 900, or an 
average of 100 apiece, their Individual productivities 
ranging anywhere from 50 to 500 apiece. Suppose that 
the tenth man, by barter, secures from each of them two- 
thirds of this, or an aggregate of 600. Then would their 
purchasing-power be one-third of their productive power, 
or an average of 23 (ranging from 17 to 167) apiece; 
while his, at 600, is eighteen times as great. 

It Is because this obscure economic dissipation is an 
instance of the dissipation of life into nothingness, quite 
as much as is the more familiar and obvious biological dis- 
sipation, that all of the activity expended or latent In com- 
petition has been styled Dissipation. In both cases life, 
time and effort are expended in a direction thought to be 
productive of value, but which is not. In the first case It 
was in the manufacture of whisky, which men think they 
need when they do not; in the second case It was in the 
promotion of sales or prices. In the collection of rent or 
interest, — In short, in barter, — which men think is a neces- 
sary part of the conduct of economic life, when it is not. 



i64 THE COST OF COMPETITION 

In their economic aspects the two sorts of dissipation 
are exactly alike : each directly wastes life by expending it 
in useless effort; each indirectly leads to a much greater 
ethical loss as a sequel. But because the first sort of dis- 
sipation is already well covered with a full literature of 
analysis and statistics, attention will here be reserved, in 
our use of the word, to economic dissipation only. 

It is important to note that in the case of economic dis- 
sipation, whether through the medium of barter or of the 
idle extraction of interest or rent, the dissipation occurs 
when the time and effort are expended in the bargaining 
(when the latter is active), or when it is expended in the 
making of the goods purchasable by the interest-money 
when the barter is of the idle form. 

No later act can ever recall that waste. The money 
won by the barter may be spent in further moral dissipa- 
tion, in riotous living, demoralizing to the community by 
its example; or it may be spent in leading an exemplary 
commercial life, elevating to the community by its exam- 
ple. Yet to the economics of the community there is 
no difference between the two; in each case productive 
effort is expended without returning to its originator the 
value of his production. 

Again, the money won by the barter may be hoarded 
into colossal fortunes, involving further dissipation of 
life in the squeezing of interest-payments out of the pro- 
ducers, or it may be spent for steam-yachts or libraries. 
Here there is a difference, between whether the second, 
later phenomenon of dissipation shall occur or not; but it 
is not one which can ever hope to cancel the dissipation 
involved in the original barter. 

The popular fallacy that it makes no difference to the 
material welfare of the community how a man gets his 
money so long as he spends it again, " keeping it in circula- 



DISTRIBUTION 165 

tlon," cannot- be too deeply condemned. Futile activity 
does no one any good. The money he returns to the com- 
munity will not support it. It is what it will buy. And 
his activity in securing this money, to be poured through 
his hands without feeding him into productive activity, has 
not increased by one atom the supply of purchasable 
goods. It has increased, on the other hand, the money- 
scale, the inflation of the average price of a given amount 
of life-supporting Value, and has decreased the purchas- 
ing-power of every dollar throughout the land. The men 
whom he hires to build him his steam-yachts and palatial 
" cottages " are apparently better off in having employ- 
ment when otherwise they might be idle ; but their fellows 
all over the land are losing every dollar that they gain, 
and more, by the method of their employment. It will 
become plain, indeed, that the only reason why any man 
has grounds for being grateful for the privilege of employ- 
ment is that barter takes place in the land and robs his 
neighbor of that privilege. 

The Efficiency of the Industrial Body. From 
these considerations, that Division i of the Industrial 
Body alone operates to its support while Division 2 joins 
with Division i in consuming what the latter produces, 
the accurate statement of the efficiency of the Body, as a 
unit and as a method of organization, — with no reference 
whatever to the intellectual, moral or muscular efficiency 
of its individual members, but taking these as the starting- 
point and considering the Industrial Body as a machine in 
which these individuals are either properly or improperly 
related to each other, — is obvious. 

The efficiency of the industrial organization of a com- 
munity is the total activity effective in Production of Value 
divided by the total activity of the entire industrial organi- 
zation visible in Income of Valuation. 



i66 THE COST OF COMPETITION 

The efficiency of organization of an industrial body may 
be further defined as the proportion between the Value 
actually produced and that which would he produced were 
all prices settled by rational, central-office methods instead 
of by barter. These two definitions will be found to be 
synonymous with each other and with the ratio of Wages- 
divided-by-Total- Valuation mentioned on page 153. 

The Dissipative Activity Greater than the Dis- 
sipative Population. It has been pointed out that the 
rewards won by barter, per unit of time or exertion, are 
far superior to those remaining to production, and that 
in natural equilibrium they must remain so; in fact, that 
the lion's share goes to the barterer, the producer getting 
only enough to persuade him to continue production. 
Therefore the individuals who are attracted from the field 
of production into that of barter include some of the ablest 
in the land. The ability which they possess is always of a 
combative, coercive sort, whereas the more purely creative 
ability seeks the arts and professions ; but it is nevertheless 
ability. This fact is to be remembered in connection with 
the illustration given on page 163. It is altogether prob- 
able that the purchasing-power which the barterer is there 
supposed to accumulate is considerably below his .natural 
productive power, which last can be brought out only when 
he alters from his antagonism to the nine, in barter, to co- 
operation with them in production. Whereas he wins 600 
by barter he could probably produce 900 if there were 
no barter. But in any event it is fair to assume that his 
latent productivity is at least equal to 600. Had it been 
developed by conserved freedom of exchange the aggre- 
gate for the ten of them would have been 900 plus 600, or 
1500, an average of 150 apiece- — as contrasted with an 
average of 90 apiece for the entire community, or 33 
apiece for the producers, under barter. Had the purchas- 



DISTRIBUTION 167 

ing-power been allotted to each in equality with his produc- 
tion, as is only just, the nine would have averaged 100 
apiece, while the tenth would have received his 600. 

This gain of two-thirds in average individual wealth, it 
is to be especially noted, is accomplished by the transfer 
from Division 2 to Division i of only one-tenth of the 
population; but it carries with it four-tenths of the total 
productivity, or more. In other words, with cooperation 
substituted for competition in any community, including 
no allowance for the increase in average individual pro- 
ductivity properly to be expected from production on a 
larger scale, the better sustenance and hope of the opera- 
tive, etc., etc., but considering only the metamorphosis of 
barterers into producers, it is certain that the latter would 
be very much the gainers and the former in no sense the 
losers by the change. 

So far as any difficulty of a single personality's assum- 
ing either role is concerned, this metamorphosis is one now 
undertaken by a large proportion of our smaller manufac- 
turers and business men from one to a dozen times each 
day. They change occupations, from producer to bar- 
terer and back again, each hour, and are all unconscious of 
the transformation. The psychological problem of ac- 
complishing it, therefore, does not exist. That the 
material is there, ready for the supposititious permanent 
change, is a matter of the most cursory observation. 

The biggest men of any industrial community are uni- 
versally to be found in the ranks of its barterers. Their 
incomes are bigger even than they. While it is common 
for the incomes of the barterers to range from one-half to 
one, or even seven millions per year, it is the exceptional 
professional man who can secure fifty to one hundred 
thousand, or even ten thousand. To the chief adminis- 
trator of our national affairs we allot the former figure. 



i68 THE COST OF COMPETITION 

The average income of the producers is about four hundred 
per year. 

The Fundamental Law of Distribution 

Purchasing-Power. According to the Law of the 
Conservation of Energy, purchasing-power (or Valu- 
ation) may never arise except as the equivalent of a 
preceding production of Value (see page 153). This 
aggregate Value suffers translation into Valuation before 
distribution, however, by multiplication by the money- 
scale, which was defined (pages 152-153) as the propor- 
tion of total to productive activity. Therefore, so long 
as any competitive or non-productive effort whatever 
exists, so long as Division 2 possesses any magnitude what- 
ever, this multiplier will be greater than unity and the 
translation of Value into Valuation will constitute an infla- 
tion. That is, if one-half of the total effort of the com- 
munity be expended in competition, for instance, then all 
prices are necessarily, on an average, just twice the true 
value of the goods. A given purchasing-power will 
return to the spender just one-half the life-support which 
it cost, which it ought to return and which it would were 
there no barter present. 

Looking at this same point from the opposite direction, 
— for it is all-important that it be clearly grasped, — the 
aggregate productivity is just one-half of what it might be 
were all existent activity directed into the productive divi- 
sion of society. Therefore the aggregate purchasing- 
power of the community will purchase just one-half of its 
own natural productivity. In other words, the average 
individual income will purchase only one-half of the aver- 
age individual's productivity — which is the average actual 
production per individual. In brief : 



DISTRIBUTION 169 

So long as any competition whatever takes place, the 
purchasing-power of the entire community must be less 
than its natural producing-power by the proportion of that 
competitive to the remaining productive effort.^ 

Demand and Consumption. It is difficult to bring 
clearly before the mind the importance of this conclusion 
in its bearing upon our common views of economic rela- 
tionship. To the average man it stands as axiomatic that 
trade needs to be stimulated or else it would not exist, that 

5 This fact may be more clear If restated in mathematical terms: 

Let the total industrial activity of the land be T and the portions of it 

which are directed into productive and competitive channels, respectively, 

be C and P. Then 

C+P=T . . . (1) 

Let / be the market-price of the aggregate commodities created by the 
industrial body, let p be the natural price, or productive cost, of the same 
and let c be the cost of competition thereover, or the inflation of their 
value into their valuation. Then 

c-\- p=t . . . (2) 

Further, 

C : c = P : p = T: t . . (3) 

C, P and T are quantities of vital activity, for which we have no units 
of measurement; c, p and / are quantities of valuation and are measurable 
in money. 

From Equations (2) and (3) is derived 

But in any community where exchange is operated, under the protection of 
law, at perfect efficiency, the relation of purchasing to producing power 
must be that which would prevail in a community where there were no 
necessity for exchange, where each man consumed exactly what he pro- 
duced, namely, unity. Since, under exchange, the purchasing-power varies 
inversely as the market-price, other things being equal, it may be said 
from Equation (4) that the dependency of purchasing-power upon the 
volume of competition may be stated as a direct proportionality to the 

c 

quantity. 2 — Tjr, 



170 THE COST OF COMPETITION 

the volume of trade depends upon the whim of the pur- 
chaser, that overproduction exists because It exceeds the 
natural, biologic ability of the community to absorb and 
consume ; that, nevertheless, there Is no limit to the demand 
for labor, so that any person really desiring employment 
can find It; and finally, that every man needs artificial 
stimulation to labor or else he will be idle, for obviously 
If he Is Idle it is because he wishes to be. That these 
several doctrines are not only hopelessly inconsistent with 
each other, but are almost the direct opposite of the 
natural facts, it Is a simple matter to demonstrate. In the 
Inverse relationship of volume of purchasing-power to 
volume of competition which has just been proven we are 
equipped for the first time, however, with the necessary 
means. 

The first step in this demonstration is to call attention 
to the more than obvious, to the Insistent, fact that to 
human desire, to purely biologic demand, there Is no limit. 
There Is no limit, visible or Imaginable, to the human con- 
sumption of goods. Of any one commodity, to be sure, 
there Is a natural limit to consumption per capita. But 
let surfeit In this one line be only just attained and there 
Is already upon Its heels a hunger for what was before not 
thought of. What was luxury, perhaps only dreamed of, 
yesterday. Is to-day a matter of current consumption. 
To-morrow It will be an absolute necessity. 

This Is current growth. It Is absolutely wholesome. 
Not only Is the worth of a people not measured by the 
extent of Its "economy," Its "thrift," Its parsimony; it 
Is measured by the exact opposite — by the amount of 
wholesome commodities which it is able to procure and 
consume. That people is the strongest which absorbs the 
most. 

There Is undoubtedly such a thing as unwholesome indl- 



DISTRIBUTION 171 

vidual appetite: sometimes exaggerated to gluttony and 
extravagance; sometimes perverted into an appetite for 
destructive things, such as opium or strong drink. But 
in every case it proves, upon investigation, to be merely 
the natural appetite diverted and distorted by unwhole- 
some forces which are wholly extraneous to the question 
of appetite itself. 

Another condition which must accompany this state- 
ment is that the appetite, in order to be wholesome, must 
create what it consumes. In our present organization of 
society this is often far from true. In a minority at the 
top gratification is out of all proportion over and above 
the necessity for creative exertion. In a majority at the 
bottom the necessity for creative exertion is out of all pro- 
portion over and above the opportunity for gratification. 
Appetite is in the first case overfed and under-exercised. 
In the latter case it is underfed and repressed, and re- 
pressed life always becomes deformed. 

The criterion of individual worth to the community is 
a hearty, unlimited appetite for all things good: an 
appetite won from a hard day's work behind one — fed the 
day before with a square meal, of bodily, mental and 
spiritual pabulum, and looking forward to the same to-day 
and to-morrow. Such an appetite means vigor of life. 
Vigor undertakes and performs tasks without the whip, 
without hire, without persuasion, without allotment even. 
It makes work for itself, and breaks it, for mere joy of 
working. A man who does not desire and enjoy work is 
just as sick, just as properly a public burden, as he who 
does not desire his dinner and, after that, all other things 
which he can procure by wholesome exertion and without 
robbery of other people. 

It is the prime business of the motor-nerves, too, to lead 
us to seek the things which appetite desires. We do not 



172 THE COST OF COMPETITION 

need to be begged to buy shoes when barefoot, nor to 
seek food when hungry. Natural impulse leads us to do 
those things. If there were not an advertisement issued, 
not a soliciting salesman in the land, all of the current pur- 
chase and consumption of standard articles would continue. 
Only novelties would need to be announced, and then 
merely in a passive way, bulletin-fashion, in any publicly 
understood method and locality, as of new books in the 
book reviews, or by mere display in the single bazaar 
which would then replace the present bewildering plurality. 
But the bulk of all advertising, on the other hand, is con- 
centrated not upon the novelties of any real Value, — not 
mere catch-pennies, — which " sell themselves," but upon 
the staple commodities. There are no fields in which 
advertising is more frantic or competitive introduction 
more vehement, than in the staple commodities: food- 
stuffs, clothing, soap, steel, house-lots, etc., of which there 
could be no possible need of enticing consumption except 
that the purchasing-power is limited to less than what is 
offered and that an artificial reward profit is attached to 
its enticement in one direction rather than another. 

This is the prime fact of the situation : that the limit of 
human consumption, and therefore of economic demand, 
of volume of trade, of factory-activity and of the market 
for labor, is not at all dependent upon any factor of 
biologic desire, individual whim or personal will, all of 
which possess no limits whatever, but upon the purely 
economic factor of purchasing-power. And while there 
is room for endless argument as to the ability of the indi- 
vidual will to affect the purchasing-power of one individual 
as compared with another, there is no chance whatever 
for argument as to his ability to control the total purchas- 
ing-power, by means of either advertising or solicitation. 
For if any individual, with the help of any purely biologic 



DISTRIBUTION 173 

factor within himself whatever, should succeed in expand- 
ing his vital activity, skill, endurance, etc., with the object 
of thus expanding his purchasing-power, he expands simul- 
taneously his and the community's potentiality for produc- 
tive power. If he direct his new activity into productive 
lines, he expands both the purchasing-power and the pro- 
ductive power of the community equally. If he direct 
it into competitive lines, he may expand his own purchas- 
ing-power, at the expense of others, but he has left un- 
touched the total volume of purchasing-power and there- 
fore the economically limited volume of production. 

The important conclusion to be drawn from this argu- 
ment is that the present existing and universally accepted 
fact that there should always be more sellers than buyers 
and more laborers than vacancies, with the seller and the 
laborer always maintaining a natural attitude of solicita- 
tion, is a purely unnatural and artificial situation; indeed, 
that it is quite the reverse of the natural. Naturally, ex- 
change should be sought solely by the buyer, who alone 
proposes to enjoy the subsequent consumption of the 
goods. Similarly, the employer should seek the chance to 
employ his man, with the same avidity and partial lack of 
success as we each of us seek time and strength for doing 
what we ourselves desire to do. The sole reason why this 
is not so to-day is the presence of an enormous volume of 
competitve effort in the community. This presence exerts 
a twofold evil effect upon the atmosphere of both trade 
and employment. In trade it (a) accompanies the 
privilege of trade with the privilege of taxing the trader, 
and (b) reduces the volume of purchasing-power. Both 
processes lead to the crowding of men into trade, as pref- 
erable to labor, and to their frantic jostling of each other 
to secure to themselves and away from the others the 
limited field for exchange. It likewise operates. In em- 



174 THE COST OF COMPETITION 

ployment, (a) to accompany the privilege of employing 
others with the privilege of retaining a portion of their 
productivity, and (b) to the restriction of the volume of 
manufactures to less than the available volume of produc- 
tive labor. Therefore the cool indifference of the buyer, 
and the struggle of the seller to secure his favor, find com- 
plete counterpart in the cool indifference of the employer 
to the string of applicants for work which he finds at his 
door each morning and in the struggle of the laborers to 
secure the limited opportunity open to them. 

Since the demand for labor in the factories depends 
solely and directly upon the volume of exchange currently 
effected with the ultimate consumer in the retail shops, it is 
sufficient to discuss the latter alone, as covering both. To 
this end it is important to scrutinize carefully the nature 
of the efforts of the barterers in their desire to " promote 
trade." Upon examination it appears that their aim is 
by no means to swell the total volume of trade. Instead, 
it is to divert what volume already exists into their own 
market, in preference to having it pass through some other 
barterer's hands. Indeed, their constant effort is to restrain 
trade — to restrain the trade of their competitors. For the 
total volume of trade they care only this much, that plainly 
the less the permitted volume of exchange the higher are 
prices, and the higher are prices the greater are their 
profits. The proportion of the total volume which passes 
their way is all they care for. If their absolute quantity 
has remained constant while its proportion to the whole 
increases, because the total volume has decreased, they are 
the winners thereby; for they are making greater profits 
from the higher prices while called upon to do no more 
work in the way of handling goods. 

In the offering of money-reward in the form of profit 
for the prosecution of competition, the public is maintain- 



DISTRIBUTION 175 

Ing a policy which could naturally result only in just these 
results, and no others. That the barterers respond to it 
with prodigious effort at the elevation of prices, the re- 
striction of output, the control of the labor-market and the 
long list of other things which the public does not want 
done which constitute the present Industrial problem, is the 
fault of the public and not of the barterers. Until it 
learns this fact there Is no hope of remedy for the situation. 
It must learn that if It wishes prices kept down it must 
adopt a policy which sends the greatest rewards to him 
who lowers prices. Instead of to him who raises them. 
If It wishes purchasing-power, volume of trade and de- 
mand for labor, to Increase, it must first reduce the 
volume of the only thing which restricts these Items below 
their natural limit, namely: the volume of competition. 
As the first and most essential step In the public's learning 
this lesson, it will be repeated that the sole limitation to 
the gratification of spontaneous desire for all things and 
especially for novelties, the sole factor in determining the 
total volume of trade, is, not desire, but purchasing- 
power^ and that the one thing which limits purchasing 
power, by inflating the money-scale, is COMPETITION. It 
is only because barter exists, constituting economic dis- 
sipation, scattering to the winds the economic power of 
the Individual, that any effort Is needed to dispose of 
goods. There Is no such thing, in a natural sense, as the 
'' overproduction " of which so much complaint Is com- 
monly heard. The prime actual fact is " underpurchas- 
ing-power, " is a purchasing-power artificially limited by 
the presence of barter, — by the barter-cost of that very 
advertising or similar effort which seeks to promote pur- 
chase, — below natural desire and below natural produc- 
tivity. Thus does barter feed upon and block Exchange, 
that natural circulation between production and consump- 



176 THE COST OF COMPETITION 

tlon which It apparently Is its sole blundering aim to 
promote. 

The Labor Market. The second broad conclusion 
to be drawn from this limitation of purchasing-power by 
the presence of barter, and one of even greater Importance 
to the community, Is this : 

The demand for productive labor is less than the supply ; 
each opportunity for its exertion becomes the center of 
competitive search by the producers, just as each oppor- 
tunity for a sale is a prize to the sellers. The man seeks 
the chance to work, Instead of, as alone Is natural, his 
exercising a choice between several opportunities, between 
several sorts of work, each of which seeks the man to do 
it, — choosing the sort which he can really do the best. 

It will be immediately replied to this, by all those who 
have engaged in the employment of labor, that the latter 
is now the case, that employers are In constant difficulty 
in attempting to find men able to do a certain grade of 
work as they wish It done. This Is undoubtedly true. It 
Is a broad fact which splendidly upholds the present 
analysis. For this ungratified search for the right man 
is always limited by a factor which does not find such 
enthusiastic promulgation at the hands of the employer 
as does his dissatisfaction with his employees; of the exist- 
ence of which, indeed, to Its full Import, he is unconscious, 
viz. : that the purchasing-power which rewards the work 
is just about one-third of that naturally accompanying the 
class of productivity which he desires. For the wages 
paid Is the Value produced by the workman, paid to him 
in the form of its Money-valuation. Because of the gen- 
eral dissipation by barter throughout the land, and not 
because of the workman's individual employer, his pay 
becomes divided by three when, in his purchases in the 



DISTRIBUTION 177 

open market, he translates it from Money-valuation back 
into material, life-supporting Value of commodities. 

It is of course not to be said that the employer could 
arbitrarily multiply his wages to each man by three, so as 
to counteract this lapse from the natural, if he only would. 
It has already been barely stated, and it will be often 
emphasized hereafter, that the employer, because of his 
competition with his fellows, is stripped of all surplus 
income and opportunity, under the same sort, if not the 
same degree, of pressure as is the laborer. Because the 
employer's life is upon a generally more comfortable plane 
than that of his employees it is incidentally true that he 
might raise wages somewhat if he chose. But it would 
amount to little for each man, nor would it be permanently 
effective. What is referred to here is quite a different 
matter .-.that the wages accorded to any position open for 
apphcants will buy in the open market, because of the 
inflated Money-scale, only one-third of what they naturally 
ought and otherwise would if the inflation were absent. 
The inflation referred to here is that of prices due to add- 
ing to the cost of production the cost of barter. And this 
inflation is due not to what any Individual employer 
abstracts from his own employees, but to the value cur- 
rently dissipated throughout the entire land by the presence 
of barter, conducted by all the employers and capitalists 
together, in connection with all commodities sold. There- 
fore the obstacle against which the employer is wearing 
himself out, in attempting to obtain suitable labor, is not 
a lack of producers; each advertisement brings six appli- 
cants for one opportunity. It is against the fundamental 
law of the parasite Barter that he is fretting: that it leaves 
in the producer's hands, through the employer as its agent, 
only suflEicient income to maintain life in a stationary, or 
very nearly stationary, position, without progress in in- 



178 THE COST OF COMPETITION 

telligerice or vim to the degree which the country, includ- 
ing the employer, would gladly have him possess. 

From all of these considerations does it appear that 
seller, laborer and employer are alike seeking that which 
is not to be found: the wasted opportunity brought back 
to life. For the opportunity to buy and consume, the 
opportunity to work and earn and the opportunity to pay 
wages high enough to attract intelligence and ability, were 
alike lost to the community, in their greater proportion, 
when Barter arose to its present enormous dimensions, 
under modern, and especially American, political and geo- 
graphical liberty, to eat the heart out of natural, free 
exchange between man and man. 



The Second Law of Distribution 

Dissipation. Economic Dissipation, taken as an ag- 
gregate, always tends to the maximum bearable by Pro- 
duction. 

This law holds true of either of the subdivisions of Dis- 
sipation: Rent, Interest, Gross Profits, Barter-cost and 
Net Profits, except as they interfere with and counter- 
balance each other in their parallel growth. In general, 
excepting barter-cost, they tend to increase equally. 

The truth of this law, if not already axiomatic from 
what has been seen of the elementary nature of barter, 
becomes further evident, by inspection, upon two 
counts : 

(i) The gain allotted to effort In barter, per unit of 
time, is very much greater than that allotted to productive 
labor. This leads to constant influx of population into 
the competitive from the productive walks of life. This 
is one of the two great forces back of that growth of the 



DISTRIBUTION 179 

city which has so markedly characterized the last half- 
century. The country districts are naturally confined 
mostly to productive effort. The cities, particularly the 
largest ones, while they also compass much productive 
effort, are the shelters of the greater part of all barter. 
Production, involving only the man, the soil, the tools and 
natural forces, can be carried on in comparative isolation. 
It is not only our agriculture and mining that are scattered 
over the breadth of the land, but our factories as well, 
dotting the maps with minor towns and cities whose 
population is almost exclusively productive. But each 
factory has its New York or Chicago office, and usually 
no business can get to or from the factory except through 
these centers of competition. Barter, on the other hand, 
involving solely the relations between man and man, can 
be carried on, at its best, only where the population is con- 
gested into the closest possible contact, for the maximum 
ease of intercommunication. 

(2) In barter the gain is not limited to proportionality 
to the period of exertion, as it is in productive effort. 
Whereas no amount of skill, in a given state of the arts 
and excluding inborn genius, can exalt the income of a 
producer beyond a certain fairly well-defined point, there 
seems to be no limit yet visible to the capacity of a barterer 
for acquiring wealth per unit of time. 

(3) The power of the barterer over the producer in- 
creases in geometric ratio to his success. Thus, a man 
possessing capitalism to the amount of $10,000 will re- 
ceive a certain current percentage from using it in barter, 
and with a certain degree of uncertainty attached; a man 
in the same line of business to the amount of $10,000,000 
(or to the same proportion of actual value of property) 
will make his securities earn more per dollar and will be 
much more certain of the continuance of his income than 



i8o THE. COST OF COMPETITION 

will the first. This Is not the day of the small capitalist 
nor of the minority stockholder. 

That is to say, the average income of each individual 
bargainer tends to increase, as well as does the number of 
bargainers. 

Wages. The second law, stated in terms of Produc- 
tion, instead of Dissipation, runs as follows : 

Wages, taken as an aggregate, always tend to the 
minimum bearable by Production. 

That is, since wages = Value-production minus Dissi- 
pation-by-Barter, as the latter tends uniformly to increase, 
as a proportion of the whole, wages must similarly tend to 
proportional decrease. This does not necessarily mean 
that the wage-rate is on the decrease. The wages paid in 
dollars and cents include four distinct factors, which must 
all be considered before any indication can be had as to the 
welfare of the recipient, viz.: {a) the wage-rate; (b) 
the proportional time of employment to the total time; 
(c) the average price of commodities; (d) the scale of the 
productive arts and of life In general at the period and 
locality In question. Each of these factors varies con- 
stantly. Each has had a whole literature devoted to its 
details. To none of them need any space be given here. 
Our argument is a blanket one. The welfare of the indi- 
vidual depends solely upon his Income of Value and Its 
relation to that enjoyed by his neighbors ; he cares nothing 
about Its valuation in dead dollars and cents. And if a 
steadily Increasing proportion of the community's current 
product of Value goes to Barter, a steadily decreasing pro- 
portion must be left available for Wages. 

There are two prime forces Influencing the average 
wage-value. One of these is the aggregate productivity 
of the wage-earners of the community. The other is the 
aggregate volume of barter In the land. According to the 



DISTRIBUTION 



ibi 



Second Law, this latter factor always exerts a downward 
pressure. Whether it be sufficient in power to countervail 
the forces tending to expand productivity, to the develop- 
ment of a current net decrease in wages, is not the ques- 
tion before us. The law merely states that the presence 
of barter always acts to make wages less than they other- 
wise would he, and as much less as the producer can stand. 

Natural Growth vs. Artificial Degeneration. 

— It is properly to be pointed out, however, that the sole 
force which tends to elevate wages is biological and techni- 
cal growth. The struggle between the two forces in their 
determination of resultant equilibrium, therefore, is one 
of money-seeking-protected-by-law against life. It will be 
developed, as we proceed, that while the net result of the 
contest, for the entire community, is and must be slow 
progress, as of a tug-of-war, yet for a certain large, 
though minor, fraction of the community it must always 
mean retrogression and degeneration. 

The Wage-System. This law of wage-depression by 
Barter also holds true for all the subdivisions of wages, 
into professional fees, salaries and payrolls, down to the 
individual wage-income, except as each tends to counter- 
balance the other. In general, they all tend to decrease 
equally. The doctors and the artists are packed into the 
same box, and under the same pressure, for all that they 
lie in the upper layers, as are the rriechanics and the 
laborers. 

The truth of this law Is evident In two directions: 
( I ) In the Competitive-wage System. — This system, 
coupled with the fact that there are always more laborers 
than opportunities to labor, enforces the law in regard to 
individuals. Each individual, in securing a job, is forced 
to accept it at the lowest possible income upon which he 



i82 THE COST OF COMPETITION 

can survive, reproduce and maintain his level in society 
and in economic efficiency. 

(2) In the Dependence of the Factory upon the City- 
office. — Viewing class-aggregates, the bargaining division 
holds the complete advantage over the producer-division. 
Labor to-day, unless it can find access to land, tools and 
exchange, — that is, to capital and a market, — is as help- 
less for its own support as if every muscle were paralyzed. 
There was a time when an alternative was open to it, when 
it could choose between specialization, adopting machine- 
methods, on the one hand, and hand-trade distributed over 
several trades on the other. Then barter could exact, for 
the privileges of exchange, only the bulk of the superiority 
of specialization with tools over Jack-at-all-trades hand- 
production, but no more. Now this limit has almost 
entirely disappeared. The superiority of the factory- 
method is so great as to have entirely displaced the other. 
The producer attempting to cling to hand-methods cover- 
ing the bulk of even his bare needs: food, clothes and 
shelter, as did our grandparents, or to hand-make any one 
of these needs and market his product unaided, would liter- 
ally starve. 

That the limit is still there, although almost Invisible, 
and that barter, in Its avarice, still presses the working- 
people hard against It, Is evident from the sporadic sur- 
vival of tenement, sweatshop and household Industries in 
the face of the far superior factory-methods. But even 
these are helpless In the hands of the professional bar- 
gainers when it comes to marketing their goods. They 
suffer as much then, in the exactions of the sweater, as 
does the factory-hand, at an earlier stage In production, in 
paying his Interest upon factory-capitalization. The 
whole phenomenon Is of interest more as a relic of the 
past: a superannuated provision against the grasp of 



DISTRIBUTION 183 

avarice, an ancient but now ruined wall against the bar- 
barian, than it is as a thing of any modern effectiveness for 
the amelioration of labor's lot. 

With every advance of the arts and sciences, introduc- 
ing automatic machine labor-savers where before indi- 
vidual effort was relied upon, correlating industries which 
before were independent, the ascendency of the factory- 
method over hand-production becomes more complete and 
irrevocable. With each such step in advance the Pro- 
ducer and Consumer alike become one degree more help- 
less in the hands of Barter. All modern complex machine- 
methods, the attainments of self-devoted students and in- 
ventors, aimed at the liberation of mankind from toil, only 
succeed therefore (in so far as Barter can prevail against 
Humanity) in riveting additional chains upon the suffer- 
ing millions. There is progress upwards, because the 
growth both of mere numbers and of ethical standards 
compels it; but it is made, every inch of it, against the 
stoutest resistance which grasping, self-feeding, parasitical 
Barter can maintain. (See Fig. 12^, p. 257.) 

It is chiefly these advances in machine-methods, which 
have been more rapid during the past fifty years than ever 
before, coupled with the material conquest of the continent 
and the abolition of slavery, which have sown the seed and 
freed the ground for such a growth of Barter during that 
time as economic history has never before recorded. ^ This 
phenomenal growth will mark this present period, in the 
centuries to come, not as the age of steam, nor of steel, 
nor of electricity : those are all yet to come, in their full- 
ness; but as the age of Barter, for that is soon to go, to 
drop away into the traditions of the ages, along with 
superstition, slavery and the feudal system, as the chief 
heraldic emblem of a luxurious and bewildering, but brutal 
and barbaric, nineteenth century. 



t84 the cost of COMPETITION 

The Producing Division Subdivided 

The Starvation-Wage. A restatement of the First 
Law of Distribution, in the form of the " First Law of 
Wages," may be made in the following form: 

In each class or level of productive effort, as a result of 
internal competition for the opportunity to labor, the 
majority of its individuals are led to accept the least in- 
come upon which they can succeed in surviving, reproduc- 
ing and maintaining their social and economic level. This 
income is known as THE STARVATION-WAGE for that 
class. 

The word starvation is used here in a technical sense. 
That it may not, in some levels of industry, become liter- 
ally true, is not to be urged; for it certainly does become sOo 
But on the other hand, in the majority of the more skilled 
grades of industry the term is properly to be interpreted 
in connection with the words " maintaining their social 
and economical level." The starvation-wage may thus 
be, in certain classes, $1000, or even $5000, per year, as 
well as the few hundreds which applies to the unskilled 
classes. A given skill in industry always demands, in 
biological equilibrium, a certain corresponding scale of 
life in other lines. No man's family can live in a two- 
room tenement and he continue long to earn the same 
wages as if they lived in his own modest house and lot. If 
a producer be forced to abandon his social pride and self- 
respect he abandons with it his ambition, intelligence, 
energy and skill. 

The Prosperous Producers. In each such class or 
level of productive effort there is a minority who receive 
more than the starvation-wage. 

These are the ones especially favored in parentage or in 
opportunity. As an immediate result of their margin 



DISTRIBUTION 185 

of productivity over necessary consumption, they are 
engaged in growth. One or two generations later will 
see the family pass out of that economic level into a 
higher one; where they may then be receiving the starva- 
tion-wage, indeed, but in a class where it possesses a much 
more comfortable significance than before. This growth 
diminishes the number above the starvation-wage in the 
lower class and swells the ranks of the starvation-wage in 
the upper class. This is why the proportion above the 
starvation-wage in any class always tends to a minimum, 
and is, at its greatest, always a minority. 

The Unemployed. The fact that the aggregate pur- 
chasing-power of the community is always less than its 
aggregate productivity (see page 169), leads to the " Sec- 
ond Law of Wages," viz. : 

In each such class or level of productive effort there 
must be another minority receiving less than the starva- 
tion-wage, which they would be glad to get if they could. 
These individuals are, more or less completely , enforcedly 
idle. 

The Submerged Tenth. In the lowest level of 
productive effort, that of unskilled labor, the Unemployed 
constitute the submerged tenth. 

Unemployment a Function of Barter, or Compe- 
tition. The primary proof of the existence of this claim 
is the deficit in purchasing-power below productivity, which 
was elaborated upon pages 169 and 170. It enables the 
following law to be added directly to the preceding: 

The average proportion of Enforcedly Idle in the sev- 
eral classes of industry, or of the Submerged Tenth to the 
total population, is a direct function of the proportion pre- 
vailing between Competitive and Total Economic effort. 

This function is not a simple proportion. It is one too 



i86 THE COST OF COMPETITION 

complex for quantitative establishment at present. But 
the line of forces which produce it: Barter abstracting 
energy and ability from the ranks of Production; the con- 
sequent deficit in aggregate Purchasing-Power below Pro- 
ductivity; the synonymous current surplus of Productivity 
over Market Demand — all show the characteristic inevi- 
tableness of a chain of cause and effect. 

The Futility of Statistical Argument. To at- 
tempt to prove or disprove these things by statistics Is 
futile, though statistics may throw much light upon them. 
To make such attempt were like pouring a barrel of water 
into the Hudson River at Albany and attempting to 
prove, by gauging the flow at New York, that a barrel of 
water more than usual went into the sea. Nevertheless 
we know absolutely that water is indestructible and that 
the pouring of any quantity into the river at Albany, other 
things being unchanged, must Increase by like amount the 
flow at New York. Similarly we know absolutely that 
nothing will produce value, life-support and purchasing- 
power except productive effort; that for each atom of 
activity which climbs, seeking Success, from productive, 
wage-earning levels Into non-productive, profit-earning, 
competitive fields an equivalent atom of life Is depressed 
from productive, wage-earning, self-sustaining levels into 
the non-productive, pauperized level of Enforced Idle- 
ness, that equilibrium may be maintained. As the prin- 
ciple of the Conservation of Matter declares the truth in 
the flow of water, so the principle of the Conservation 
of Economic Energy enlightens the case of the Profit- 
maker and the Submerged Tenth. Human life Is drawn 
Into these non-productive extremes, against humanity, con- 
science and all higher ideals, as water Is drawn Into the 
clouds and Into the depths of the sea : by the Inflated life 
of illumined ease at the top, by the quiescent irrespon- 



DISTRIBUTION 187 

sibllity in the darkened depths. It is axiomatic that noth- 
ing will alter this phenomenon except the reversal of this 
temporary and artificial force of gravitation and the 
award of the material prizes of life to the productive 
effort which creates them, and the allotment of nothing, 
of mere want and humiliation. Instead of inflated money- 
command of men, to the competitive effort which wastes 
them ; that, until this be done, to try to employ the unem- 
ployed is as trying to pump out the sea. 

The Irrelevance of Psychic Forces. — Nor can 

the situation be at all enlightened by any inquiry as to 
whether or not any Individual among the unemployed 
desires employment. When they first lose It they do, of 
course. But after a certain amount of futile wandering 
In search of work the natural desire to work dies out. 
The man becomes a tramp and the woman the same, 
though we call her a worse name. Desire for or against 
work has something to do with which individual Is chosen 
for Idleness. It has nothing whatever to do with the 
number force-drafted Into Its ranks. It Is as If a regiment 
were to be selected from a community according to short- 
ness of stature: thick soles to one's shoes might avail to 
keep some man out; but It would Inevitably force In 
another who otherwise would have gone free. The pres- 
sure of barter, crowding down upon purchasing power, 
Is arrested only by a counter-pressure of life refusing to 
die. A certain volume of life, engaged In this slow pro- 
cess, must be currently In existence, as a public burden in 
almshouse, prison, asylum or slum. In consequence. 
Whether Its resistance be voiced intelligibly, as from the 
laborer seeking hire, or more obscurely, as from the con- 
stant menace to public security latent In the tramp, the 
footpad and the grafter, makes no difference to the 
limitation of aggressive barter. The prime point Is this: 



i88 THE COST OF COMPETITION 

that Barter, in its strenuous keenness, insists ever that the 
resistance shall be stout, or it will bear it still further 
down. It is only industrial idleness, coupled either with 
fresh diligence and organization when recently imposed, 
or with hardened violence when older and grown callous, 
— the idleness of organized labor or that of the desperate 
criminal, — that may constitute a substratum of life suffi- 
ciently compacted to hold Barter up and keep it at bay.® 

The Dilution of Enforced Idleness. Nor must 
all of this volume of idleness be expected to appear in the 
form of a population each member of which does nothing 
at all. They nearly all do a little, during a part of the 
time. Some do nearly as much as will earn the starvation- 
wage. But they are all below it, slowly starving — 
usually under more comfortable names : such as consump- 
tion, infantile colic, etc.'' It Is this modern question of 

6 A university professor is reported by the Search-Light as having 
studied the tramp-question in England by interviewing some 2000 wan- 
dering beggars as to why they did not support themselves by work. Will- 
ingness to work but inability to find employment was expressed by 653, 
or 32 per cent., of them; the answers of 445 were vague; 301 expressed 
the opinion that " no one ought to be obliged to work, but if some fools did 
so they [the vagrants] were justified in living on them"; 407 alleged 
plans for procuring work at certain far-off localities; the remaining 194 
were living in hope until their relatives should die and leave them money. 
As a study in psychology these statistics are probably reliable and of value. 
They show the proportion of those who are still honestly seeking employ- 
ment as one-third of the whole, while those who have been degenerated 
by the enforced idleness or other causes into indifference constitute the 
remaining two-thirds. But as an indication of the true cause of economic 
idleness they are absolutely worthless. No sane man would think of 
approaching these two thousand unfortunate individuals as a source of 
reliable information upon any other topic. How can they be expected to 
give it upon the unusually difficult one of political economy? 

"^ A recent article from the pen of an eminent physician, treating of the 
possibility of eradicating tubercular consumption from the community, 
gives the following list of measures necessarily to be adopted by the people 
to this end: (i) Fresh air; (2) ample nutrition; (3) complete rest. How 
compatible is this prescription with a starvation-wage, or less! 



DISTRIBUTION 189 

the proportion of Idleness In the time of each nominally 
employed laborer which Is upsetting all of the old- 
fashioned conclusions based upon mere rate of wages, 
now able to throw almost no light upon the laborer's true 
economic condition. It Is this partial employment which 
enables so few and such weak ones to successfully counter- 
balance the enormous might of the competitive organiza- 
tion : they starve so slowly that each one counts for a good 
deal of resistance. The resistance of life to degeneration 
and death Is ever astounding: courage, self-respect and 
physical constitution wear away so very slowly. So that 
It Is a kindly plan, In one aspect, this plan of partial 
employment: It breaks the suddenness of fall Into want 
and degradation, substituting for it a slow gravitation, 
as into quicksand, from the respectable poverty of 
unskilled labor Into the immeasurable depths of chaos 
below, where there is no self-respect, no courage, no moral 
or bodily stamina — only incoherent drifting where chance 
currents may direct, only pauperism, disease, crime and 
insanity: life appearing to Its wretched votaries as a vague 
nebula of uniformed officials, steam-heated prisons, hos- 
pital-wards and numbered certificates, certain to crystal- 
lize only finally in a nameless death and a dissecting-room 
burial. 

The Law of Barter and Wages Affects all 
Levels of Society. But, though this Is the worst of It, 
It Is not the most of it. All through the laminated struc- 
ture of the body economic, in every one of the upper 
layers, this law of action and Its Inevitable resultant 
phenomena find instance. No degree of average indi- 
vidual development may protect a superior class from Its 
presence. Within its ranks, even if it Include the ablest 
in the land, is Its due proportion of the unemployed — a 



190 THE COST OF COMPETITION 

less proportion as the higher levels are attained, but a 
rigid one, never sinking to zero. 

This ever-present artificial repression of life is the 
cause and source of the desperation, distortion and 
atavism into crime, insanity and suicide which is con- 
stantly appearing in all levels of society. Psychology 
may explain its internal workings, heredity may pass it on 
from generation to generation; but it is Barter which 
creates it. 

The Repression of Genius. But with these classes, 
however, the unemployment is never baldly visible. 
Rather is it the better concealed, agreeably to culti- 
vated habits, than in the lower classes. Nor does it 
take the form of bodily starvation, as with the Submerged 
Tenth. A worse form, according to the standards of a 
civilization nominally worshiping art and progress, is 
reserved to it: that of the starvation of genius. For in 
each of us is the spark which deserves that name. When 
we meet the acknowledged representatives of the class, 
the successful in any of the lines of creative art, we 
modestly disclaim any literary ability, any real knowl- 
edge of music, any proper taste in pictorial art, still less 
a skilled appreciation of beauty in architecture, the first 
of all social arts. But down in the heart within us lies 
the more or less conscious faith that our words are all 
lies, that we know enough of these things to feel them 
— which is all, in the best sense, that anyone knows. We 
know that our feelings may not have the catholic founda- 
tion or the extreme sensibility of the trained professional 
perception. We usually know, or think, that we lack 
creative ability. But of the enjoyment we are certain. 
Of the starvation of both we are also certain; for as to 
how far we lack creative ability we know with certainty 
only that we have never, most of us, had a fair chance 



DISTRIBUTION 191 

to find out. Our best productive strength, rewarded by 
Barter with one-third of its natural result, is all needed 
to feed the body and to give the mechanical intellect a 
fair degree of cultivation. The much slower and more 
costly development of taste, perceptivity and imagina- 
tion Is crowded back and out — unhappily not so far but 
that it remains ever upon the visible horizon, a shining 
Carcasonne, a feast of Tantalus, to the spirit which has 
only partly learned resignation and which still resents 
the forced surrender before a tyrannous gilded Idol, 
before an Institution not embodying Godhead, before 
that Krishna of Selfishness styled the Competitive System. 

In this sense, then, of being required to concentrate 
one's best efforts upon the tasks which are really of the 
least value to us and to the community, albeit the only 
ones for which It will award us Purchasing-Power, can be 
added this additional statement of the Law of Enforced 
Idleness: 

That even among those who retain the privilege of em- 
ployment the economic coercion is toward the maximum 
employment of their most material parts and the minimum 
employment, amounting frequently to complete idleness, 
of those portions of their latent ability to which civilized 
ethics universally accords the highest standards of value. 

This law applies both to questions of social ethics and 
to those of economics. It becomes of interest chiefly in 
considering the ranks of the arts and professions, includ- 
ing the designer and the Inventor, and the sources of their 
current supplies of recruits. 

The Rigidity of the Laws of Distribution. This 
relation between the volumes of barter and of enforced 
idleness is a rigid one. No amount of ethical effort on 
the part of charitable missions, the pulpit or the public 



192 THE COST OF COMPETITION 

press, except as It may succeed in diminishing the volume 
or the keenness of barter, can affect it in the slightest. 
No amount of altruistic economic effort: no alms-giving, 
no employment-bureau, no vacant-lot cultivation, no 
forced public works, can possibly alleviate the situation, 
except as they may Incidentally restrict barter. Give a 
man money and you temporarily ease the pressure upon 
his class; barter will follow it up and absorb it until the 
pressure Is the same as before. Show him how to live 
upon eight cents a day, as did kindly Mr. Atkinson of 
Aladdin-oven fame: If his class adopts the plan sufficiently 
for the Idea to accomplish anything at all, wages will 
promptly retreat to eight cents per day In consequence. 
Pick a man up out of the ranks of the unemployed and 
arbitrarily give him a job: he Immediately absorbs the 
purchasing-power which was before keeping someone else 
at work, and somewhere else some other poor chap Is told 
to '' get his time " In consequence. Statistics will not 
reveal these things, any more than they would the futility 
of the perpetual-motion hopes of a half-century ago, but 
the law of the conservation of energy, intelligently 
applied, makes them both equally clear. 

For a century or more organized charity has struggled 
with the problem of how man's natural promptings 
toward sympathetic assistance of his needy brother might 
find expression in the economic world. Mere paternal 
alms-giving has long ago proved its futility ; it pauperizes 
and demoralizes the worse elements among the poor; it 
fails to satisfy the better. After generations of failure, 
bitter experience has taught organized charity the one 
big lesson: To cease giving alms and to offer encourage- 
ment and opportunity instead. The chief effort is now 
directed toward the finding of employment for those with- 
out it. 



DISTRIBUTION 193 

It is not to be said that this effort is absolutely fruit- 
less. A little time is gained, at least. Any mechanism 
which operates to increase the fluidity of labor, to pro- 
mote its circulation from the locality or trade where 
opportunity is for the moment restricted to others where 
the instantaneous conditions are more favorable, tem- 
porarily aids labor in its struggle with the competitive 
classes. Some charitable labor-bureaus accomplish some- 
thing in this line, but most of them do not. These laws 
not being widely understood, any employment which 
removes the visible want is utilized to occupy the unem- 
ployed; so the effect is temporary and local only. As to 
the permanent alleviation of the average conditions of 
labor, of the average proportion of idleness in the com- 
munity, the futility of artificially lifting men and women 
from the submerged into the employed level may be 
asserted very positively. It is absolutely futile. To 
attempt to drain the sea by pumping water from it to the 
nearest hilltop and pouring it out upon the farther side 
is no more so. In fact, the competitive system almost 
completely shuts off all hope of the effective transfer of 
economic aid from those who have plenty to those who 
are needy. The transfer of ethical strength, of hope, 
encouragement and education, is all that is possible. This 
and the beneficial ethical reaction upon the giver which 
results from charitable effort constitute the sole gains to 
the community which may be hoped for from it. 

Artificially Enforced Degeneration. The En- 
forcedly Idle are currently engaged in industrial and 
social degeneration. From the class in which they are 
forced to be idle they gravitate finally, after a sufficient 
wearing away of hope and self-respect, into a lower one 
where they are able to secure at least the starvation-wage. 
This again proves that the latter subdivision tends to a 



194 THE COST OF COMPETITION 

maximum. From whichever direction recruits enter a 
class, from above or from below, they enter by the door 
of the Starvation- Wage. When they are rising it means 
Hope, albeit coupled, for the time, with penury. WJien 
they are going down It means all the bitterness of Insuffi- 
cient food eaten with shame. 

This phenomenon of enforced Idleness Is existent In 
every economic class and level. Its Individuals are 
familiar in all the walks of life. But there is a vast dif- 
ference between the submergence of a member of one 
of the upper layers of society, having a comfortable layer 
below, however unwelcome, into which to sink, and the 
submergence of an unskilled producer. For below this 
layer is nothing but chaos : only pauperism, crime, suicide 
or, sometimes, as a gift from Heaven, " natural " death. 
This Is the only reason why this subdivision tends. to be a 
minority: Its stout resistance to slow and agonizing, or 
slow and stupefying, death. There is no need for the 
fashionable drawing-room discussion of " natural " 
degeneration. It is very doubtful if there be any such 
thing, In genus homo at least. There Is enough, and 
more, of the artificial sort Involved in this one Law of the 
Submerged Tenth to answer all the known questions and 
to occupy for long the intellects and consciences of those 
who are engaged in upholding the present commercial 
system. 



IX 
THE ECONOMIC ORGANISM 

ECONOMIC society now becomes visible as a living 
organism. Material capital constitutes its bones 
and tissue: the things with the aid of which (but 
not upon which) It lives and which need to be supplied 
only as they incidentally wear out and want repair. 
Material Value In Exchange constitutes Its circulation: 
the blood upon which It exists and which must be cur- 
rently manufactured as fast as life proceeds, or death 
ensues. 

Its Structure. — In attempting to Illustrate this organ- 
Ism diagrammatlcally, we must be guided by our past 
analysis. The two main divisions of the body economic, 
Production and Dissipation, must be demarked from each 
other by a horizontal plane, with the former below and 
the latter above; for It was shown plainly that the latter 
both holds the power over and Is supported by the 
former.^ 

Within Division I must be created several horizontal 
subdivisions, or layers, to represent respectively the more 
and the less skilled producers: the arts and professions at 
the top, the highly skilled artisans next, the ordinarily 
skilled mechanics who have acquired a " trade " next 
below, the unskilled laborers next to them, and, lowest of 
all, the Submerged Tenth. The diagram is an economic 
classification of activities, not of population; therefore, 

1 See Fig. 7, page 198. 
195 



196 THE COST OF COMPETITION 

since within either division alone the productivity is pro- 
portional to, although not equal to, the income enjoyed, 
the various portions of individual activity going to make 
up these respective layers are to be classified therein 
according to money-wages received. 

Within Division II are also needed horizontal sub- 
divisions. Labor cannot produce without access to and 
exchange of valuation with both land and capital. The 
species of barter which attaches itself to this sort of 
exchange is capitalism. But labor also cannot either pro- 
duce or consume without access to exchange between trade 
and trade. To this sort of exchange attaches itself barter 
pure and simple. When labor has produced value and it 
has been translated into valuation, the first slice cut off 
therefrom in its distribution throughout the community 
is rent and interest, to lump these two together. From 
the remainder Barter next abstracts all that it can take 
and still leave to Production its indispensable life-blood. 
What is left goes back to the producer in another form of 
commodities, now fit for his own consumption, whereas 
what he produced was not. Therefore, of the two layers 
into which Dissipation is to be divided, the upper one, 
farthest away from Production and accessible from it only 
through Capitalism, must be Pure Barter. Next beneath, 
supporting Barter and resting upon Production, must 
come Capitalism. 

Capitalism thus interferes In the exchanges between 
Labor and The Market in two ways: 

( I ) When the Labor-Value is transmuted into Money, 
for distribution throughout the community; that is, when 
the laborer is hired. Capitalism-connected-with-Produc- 
tion then uses its advantage in barter to keep the price of 
labor (which is paid in Money-valuation) as low as 
possible. 



THE ECONOMIC ORGANISM i97 

(2) When the Value comes hack again to Labor for 
consumption, In support of its life; that is, when the 
laborer turns Consumer and purchases in the open market 
the goods which it needs to consume. Capitalism-con- 
nected-with-Supply then uses its advantage in barter to 
keep the price of commodities as high as possible. ^ Both 
sorts of capitalism need display in the diagram, this time 
side by side. 

In further horizontal subdivision, Capitalism might be 
distinguished between Landlordism, collecting Rent, and 
Capitalism proper, collecting Interest, respectively. 
Barter might be subdivided into wholesale and retail 
barter, respectively. But little gain in lucidity would be 
attained by either complication of the diagram. 

Such a diagram is illustrated in Figs. 7 and 8. The 
former is a vertical plane section across the ring shown in 
perspective in Fig. 8. Its further features are to be 
explained as follows: 

Its Circulation. Production is divided into its sev- 
eral specializations, properly to be called Trades, Each 
trade produces value in only a single form, relying 
upon Exchange to bring to it all of the other forms which 
it may need. Each trade possesses its portion of each of 
the horizontal layers : its submerged tenth at the bottom, 
its laborers, its skilled artisans or designers, its capitalism 
and its barter. Therefore the partitions between the 
several trades must be vertical planes. 

Because the direct exchange of goods for goods is now 
no longer possible, the circulation of value cannot take 
place below the barter-level Therefore the vertical par- 
titions separating the trades must be regarded as imper- 
vious walls extending up to the lower limit of Barter, 
just above Capitalism. There may be, of course, a very 
great number of these trades. To aid the eye they are 



198 THE COST OF COMPETITION 

collected Into groups; but in fact each vertical lamina is 
an independent unit, shut off from its neighbor by a rigid 
economic wall. There are, of course, many more of them 
than can be depicted in the diagram. 

Each trade is as a well, or as a cell in a honeycomb laid 
flat : accessible for ingress or egress only at the top, where 
it meets Barter. To Barter it gives up all value which 
it produces; from Barter it takes in whatever sustenance 
It may get. But before either giving up its product to 
Barter for distribution, or purchasing its sustenance from 
Barter, it must pay its toll to Capitalism, which seals the 
doorway to all exchange with the outside world and 
abstracts its taxation from all passing traffic. 

In the body economic, as In all other organic bodies, 
there is circulation. So essential Is the circulation to the 
life that it is often loosely said that the circulation is the 
life. In the body economic this vital circulation is that 
of Value (not of Valuation, nor of wealth, although each 
atom or corpuscle of Value Is always enwrapped In Its 
envelope of Valuation). It consists of rotational or 
cyclical motion in each of two planes: 

( 1 ) The vertical, shown In Fig. 7 : going on within 
each trade or occupation — within each Individual, Indeed. 

(2) The horizontal, shown in Fig. 8: from one trade 
or occupation to every other. 

The vertical circulation starts with the production of 
Value within the lower, or productive, layer. This Value 
is always, practically speaking, in a form wholly worthless 
to the producers themselves and unfit to sustain their life. 
In industry in its modern form the shoemaker, for 
instance, does not and cannot wear the shoes he makes,, 
any more than can the doctor swallow his own pills and 
advice. Before any of these commodities can serve to 
sustain life they must be transmuted into money, or sold; 







'I "o!si.*?(I-^ 



200 THE COST OF COMPETITION 

which process can be accomplished only in contact with 
Barter.^ But even the money so obtained is unfit, of itself, 
to support life; it needs first to be transmuted, by pur- 
chase, back into commodities again, but this time into the 
commodities needed by the producers for consumption in 
their prosecution of further life and effort. 

It is plain that purely vertical circulation alone could 
bring back to the producers only the very commodities 
which their particular Trade or Occupation had excreted, 
and could therefore accomplish little or nothing toward 
biological support. This difficulty is overcome by the 
horizontal circulation within Division II, which takes 
place in either direction. By its means the value of com- 
modities excreted by any one trade or occupation is trans- 
ported to any other which may need their support. 

Everything in Division II is perfectly fluid. Value, 
liquidated into Money-Valuation, circulates freely within 
the Barter-zone, so far as locality or ownership is con- 
cerned, from any one trade to any other. Capitalism does 
not circulate, in the proper sense of the term, that is, move 
continuously in a cyclical path; but it drifts freely back 
and forth, from any one to any other part of the organism, 
wherever the greatest need for it may be, with almost 
perfect fluidity. Therefore, the walls which separate the 
trades and which are impervious to all circulation of 
Value, are not impervious to the osmose of Capitalism. 

To illustrate this circulation of Value the horizontal 
aspect of the economic organism is shown as circular, or 
annular, in Fig 8. The arrows in the two diagrams show 
the two sorts of circulation. Production maintains ver- 

2 The sale actually negotiated is that of the labor involved in producing 
the given commodity. The producer no longer sells the commodity he 
produces; instead, he sells his labor; but the price thereof is based directly 
upon the amount of goods which become available for sale as the result 
of its eiforts and the price which they will bring in the competitive market. 







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THE ECONOMIC ORGANISM 201 

tical circulation within each trade or cell (or each indi- 
vidua!, it may be) by absorbing for its sustenance finished 
commodities from The Market of Barter above, by biolog- 
ically transforming this material energy into Life, and 
by transforming this vital energy back into material 
economic energy of Value, in laboriously producing and 
excreting up into The Market the finished commodities 
resultant from its productive effort. It maintains the 
horizontal circulation of all commodities within the upper 
layer, that of Exchange by Barter, by the excretion from 
its own cell of its own particular commodity only and by 
its absorption into itself of a portion of the excretions of 
all of the others.^ 

3 The energy-transformations occurring continuously within each cell 
of the productive layer, viz.: the consumption of material commodities, 
their dissolution into human life and the expenditure of that life in the 
production of new material commodities, is purely a biological, not an 
economic, process. Toward the improvement of its efficiency is directed 
all education and discipline of an industrial sort. But to the question of 
the proportion of poverty prevalent in the community at any time all such 
effort, or its resultant increase in individual productive efficiency, is wholly 
irrelevant. It was shown (pp. 76, 102) that the emulative response of the 
individual to such effort tended to elevate all individuals at an equal rate 
and to keep them generally on a plane of equality in productive efficiency; 
it was shown on page 81 that whatever that efficiency might be Barter 
would leave to the individual only enough, on the average, for a starva- 
tion-wage, — that whatever progress the community as a whole might 
make, Barter would see to it that we had the poor with us always. There- 
fore, it concerns us, in this analysis, to see alone what becomes of the 
produce excreted by these productive cells, — which has always had the 
superficial appearance of being sufficient for the maintenance of society 
in complete comfort were it only properly distributed, — and to abandon 
forever the cruel superstition to the effect that the producers would exist 
amid plenty if they would only properly develop their productive effi- 
ciency. The writer is glad to assert, at this juncture, that he believes this 
efficiency to be always near the three hundred per cent, mark in Division I, 
each producer returning to society all, and twice more, than he receives; 
and that it is only in Division II, where plenty prevails and where the 
income is large and the effective productivity nothing, that the biological 
efficiency (for the economic efficiency is zero or negative) falls far away. 



^o2 THE COST OF COMPETITION 

Absorption. Within this horizontal current of Ex- 
change, like an eel in a water-pipe, lies Competition, or 
Barter, absorbing sustenance from the current which 
passes through it and fattening upon what it absorbs until 
its plethora too much chokes the circulation to permit 
it to accumulate further fat.* What it receives is Value; 
what it allows to pass again into the producers' hands is 
Valuation: true Value inflated to triple volume, a current 
of one-third the density of Value. So that what Produc- 
tion receives again for its efforts is a volume to every 
outward appearance equal to its original productivity, 
and stoutly maintained by Capitalism and the Bargainers 
to be that equal, but which is in reality diluted with two- 
thirds water, — diluted and burdened with two-thirds cost 
of competition, — so that its real life-supporting power is 
thin in that proportion. 

Vertical Competition. Within the limiting cuticle 
of this organism, or its external limitation by natural 
environment, exists fluid-pressure in every direction. 
Barter, waxing fat, squeezes down upon Production, both 
by its mere weight and by its capillary activity, calling 
ever for '' More, more ! " Production, almost asphyx- 
iated by difficulty in purchase and consumption, at inflated 
valuations with diluted wages, squeezes back with what 
pressure it can, striving still more strenuously to gain its 
breath of life and to keep up the output. In between lies 

by various large fractions, from perfection. But. whether he be right or 
wrong in this affects not at all the argument in hand, which is that the 
efficiency of distribution by the modern commercial system, of the value 
actually noiv produced by Division I and poured out into the community 
through the hands of Division II, depends primarily upon the proportion 
of Division II existent within the community. 

* This is the process called, in railroad-management, "charging all 
the traffic will bear." The same policy prevails, under other names, in 
all successful businesses. 



THE ECONOMIC ORGANISM 203 

Capitalism, as passive as a leech, as indifferent to pres- 
sure as a flounder, knowing full well that no amount of 
striving, either above or below, can rob him of his toll. 
The effort of Barter is to keep down the wages of labor, 
to maintain a monopoly of the market and to keep up the 
prices of all commodities to the Consumer. There is no 
effort on the part of Competition to keep down prices, as 
Is commonly supposed. Its sole effort Is to make prices 
seem low. The difference to the consumer is as that 
between black and white, between truth and a lie; such is 
the difference between Barter's constant pretense of keep- 
ing down prices and* Its actual fruits. Indeed, uncon- 
sciously to the barterers. It is the mere presence of the 
present enormous volume of competition, with the exces- 
sive cost of its maintenance, which explains two-thirds of 
the price of the average commodity reaching the con- 
sumer. But even within his own consciousness Is the 
knowledge that, so far as his efforts are purely negotia- 
tive, his endeavor is all against the mental attitude of his 
opponent: to make him believe that he Is getting much 
and giving little, and solely that the opposite fact, the 
surplus of what he gives over what he gets, may be as 
great as possible. If he Indignantly doubt this, let him 
ask himself, after any successful negotiation whatever. If 
the result would have been the same had he disclosed to 
the other party every atom of information which he pos- 
sessed as to the true worth of the goods— what he paid for 
them, where he got them, how much more of them are 
available, etc., etc. 

No one bargainer may elevate prices appreciably more 
rapidly than do the rest, it is true; but that Is the utmost 
that can be said in defense of competition, and it is very far 
from saying that they any or all of them ever seek a real 
reduction of prices, In aggregate or average. It Is impos- 



204 THE COST OF COMPETITION 

sible to imagine a bargainer striving to keep down prices; 
his sole means of livelihood is in selling higher, and as 
much higher as he can, than he buys. Unless he suc- 
ceed in making his excess of selling-price over buying-price 
greater than that of his competitors, he fails to survive. 
This is the primary fact of competition. And since his 
buying-price rests, ultimately, upon the soil and the 
unskilled laborer, — positive and inelastic foundations both, 
— this means that the ultimate selling-price is constantly 
being elevated. Since the consumer naturally resents this, 
the prime aim of intelligent competition is to acquire the 
power, by combination and organiz*ation, to overcome or 
disregard this resistance. Whatever be the method of 
organization amongst the barterers, under various names 
and of divers degrees of permanence, all the way from 
partnerships, small firms and close corporations to the 
'' trusts " and those unformulated conspiracies such as the 
'' coal-clubs," the ultimate aim is ever to better control 
the market and to exalt prices. 

It Is futile to reply to this: "That Is not competition, 
but the abolition of competition." It is competition, a 
fiercer competition between bargainer and consumer tak- 
ing the place of a milder competition between bargainer 
and bargainer. But the force of our position does not 
depend solely upon this point, although it Is true. All 
sorts of competition raise prices. For the sole reason 
why any bargainer might ever be Imagined as lowering 
his prices Is to Increase his market; and It Is axiomatic 
In business that the most effective way to Increase one's 
market Is by advertising, rather than by lowering prices. 
But every item of advertising, of commercial traveling, 
of catch-trades of whatever description, inevitably in- 
creases the cost of the article to the consumer. He Is 
the only possible one to pay for it all, from the kernel of 



THE ECONOMIC ORGANISM 205 

Value within to the last dash of scarlet ink on the fancy 
wrapper without. 

Nor is it sufficient to urge that this advertising policy 
so distributes the bargainer's profits over a greater 
number of buyers that each pays less for what he receives. 
The facts deny it. If this were so, the proportion of 
buyers to sellers must be steadily on the increase; the 
volume of profits in proportion to value handled must be 
on the decrease. The opposite of both is true. It is the 
most phenomenal and characteristic sign of the times that 
the proportion of buyers to sellers is steadily on the 
decrease, while the volume both of advertising effort and 
of net profits going to the bargainers is steadily upon the 
increase. According to the laws stated in the preceding 
pages: that barter and advertising tend to exalt prices 
and to decrease consumption and constitute a destruction 
of the community's wealth, these facts are both consistent 
and natural. With the popular idea, however, that 
advertising increases the volume of trade and that com- 
petition lowers prices, they are absurdly inconsistent. 

Let one but stop to consider the fact that there is no 
natural reason why anyone should ever desire to see prices 
rise, nor any natural force which would tend to raise them. 
In fact, all natural evolution, with time, tends to depress 
them. This is now palpably true in the productive field. 
Productive costs are, on the average, not more than one- 
fourth of what they were fifty years ago; but selling- 
prices are. Indeed, they are sometimes higher than they 
were fifty years ago. It is solely the artificial and 
unnatural relations established by the competitive system 
which ever lead anyone to think of raising prices at all, 
for it is the competitive system alone which makes it pos- 
sible for anyone to profit thereby. Under natural, free 
exchange, the natural desire of the producer is ever to 



2o6 THE COST OF COMPETITION 

lower the price of his own output; for that is accom- 
plished only by increasing his production, and therefore 
his consumption. But under barter, the higher the price 
of the commodity the greater the profit. This is obviously 
true regarding each piece sold. But so far is it true that 
even when fewer pieces are sold, in consequence of the 
higher prices, the net profit to the seller is greater. This 
is the economic fact back of all artificial restriction of out- 
put — and it is woefully prevalent. The railroads " charge 
all the traffic will bear "; that is, quite conscious that they 
are charging so high that the traffic is restricted thereby 
below the natural demand, their only care is not to restrict 
it so narrowly that even the exalted profits earned per 
passenger are thereby incapacitated for resulting in 
increased aggregate profits. In other words, competition 
puts every inducement before the bargainer to raise prices 
and restrict the volume of trade; natural exchange offers 
every inducement to the producer to depress prices and 
increase the volume of trade. 

The Reaction to Vertical Competition from 
Below. The constant aim of Production, in this vertical 
internal squeeze originated by Barter, is to maintain its 
purchasing-power. In this its only opening for effort, out- 
side of the tyrannical trades-union strike, — its sole 
weapon in the war-game introduced by the Profit-seekers, 
— is in increased productivity. But that is no opening 
at all. It avails not one whit to satisfy the unlimited 
absorptive power of Barter. Within the last half-cen- 
tury Labor's productivity has multiplied probably four- 
fold; yet Barter now absorbs a greater proportion of this 
enormous output than it did of the meager wealth of fifty 
years ago, leaving to Wages practically the same actual 
income of Value per man that he enjoyed in those primi- 
tive days (see p. 257). From this Labor is learning its 



THE ECONOMIC ORGANISM 207 

obvious lesson: to abandon this futile policy of trying to 
do more or better work in order to gain a competence, and 
has almost had sense enough to adopt the plain example 
of the only class which ever does attain wealth, the bar- 
gaining-class : to concentrate its efforts upon the attain- 
ment of a maximum price for what It has to sell, with 
little or no care, without knowledge even, as to whether 
what it sells be much or little, good or bad. Far be it from 
our present purpose to inculcate such a lesson of evil for 
evil. But when evil is done for evil it should not be the 
first doer who blames the second for the entire fault — 
although it usually is. If it be adopted as our national 
policy to place the uppermost classes in a position where 
their own profit must necessarily be their first consideration 
and where what they furnish to the individual consumer 
or investor is the secondary, the blame cannot lie with less 
favored classes if they follow suit. 

The Passivity of Capitalism. Capitalism makes 
no effort. The instant its capital comes out of employ- 
ment and the capitalist exerts himself to find opportunity 
for reinvestment, or a better rate of interest, he ceases 
to be a capitalist and becomes a bargainer. It is only 
when his capital is in use, earning interest, and he is idle, 
that he evinces capitalism. 

Vertical Competition Defined. All such vertical 
pressure between divisions, layers or classes — including 
that between the Barterer and the Consumer, although 
in the latter case the individual consumer may be of the 
same layer as the individual barterer who is exerting the 
pressure at the moment — is to be known as vertical 
competition. 

Horizontal Competition. The fluid pressure felt 
by each layer also expresses itself horizontally throughout 



2o8 THE COST OF COMPETITION 

that layer, as Is to be expected. Labor competes with 
labor for the opportunity for employment; capitalism com- 
petes with capitalism for the opportunity for investment; 
barter competes with barter for the opportunity for pass- 
ing through its hands the circulating current of Value 
seeking exchange, for the sake of the toll absorbed there- 
from in the shape of Profit. All such competition is to be 
known as horizontal competition. 

Evolutionary Tendencies of Vertical and Hori- 
zontal Competition. It is to be noted here, in 
passing, that the prime characteristic of contemporary 
economic evolution is the steady diminution of horizontal 
competition — in Division I by the closer and closer 
organization into trades-unions competent to present to 
the pressure from above the maximum possible, even if a 
comparatively unavailing, defensive resistance; in Divi- 
sion II by the closer and closer amalgamation of enter- 
prises of Barter into steadily larger units capable of exert- 
ing a steadily increasing aggressive pressure against the 
Consumer. That is to say, both above and below, in the 
econoimic organism, horizontal competition is being 
abandoned, as unprofitable, in favor of an ever-keener 
intensity of vertical competition. Barter is learning to 
keep its hands off both from other barterers and from 
Labor; for both Activities, organized and armed, can hit 
back: the former in a fight to the finish, the latter in an 
indecisive, desultory annoyance which it were well to 
avoid, if possible. Both can be avoided and the end in 
view still retained if the aggression be turned aside from 
them and addressed to the Consumer; for he has scarcely 
a thought of organizing, not to mention any prospect of 
accomplishing it, and cannot possibly hit back. Although 
organized politically under the name of the United States 
of America, in a unity of purpose and an unselfish patriot- 



THE ECONOMIC ORGANISM 209 

ism In aggression and defense which brooks no affront 
from the proudest nations of the earth, yet economically 
each citizen of these same States stands, as a Consumer, 
alone, unorganized, unprotected by his flag, under an 
oppression from organized Barter which is as shameful as 
it is cruel.^ 

Parallelism of Structure of Divisions I and II. 

The horizontal competition between bargainer and bar- 
gainer leads to the establishment within his own division 
of the same laws which have been deduced as applying to 
society as a whole, but much modified in form by their 

5 See Mr. Baker's article in the September McClure's (1903) upo" the 
harmony existing in Chicago between the coal-dealers, the teaming-cor- 
porations and the teamsters, practically their employees. The former are 
organized into an " Association," the latter into a " Union " ; the two 
have agreed not to make war upon each other, but to work together against 
the public. As the public constitutes the sole source of income for both, 
this is plainly good common sense. To quote Mr. Baker: *' Once at war, 
Union and Association have now come together in a close combination; 
for months Messrs. Driscoll and Young have met day by day in a dingy 
Dearborn-Street office, have ruthlessly crushed competitors and ' scabs,' 
and, backed by their unions, have so directed and regulated the entire 
teaming industry that the public of Chicago pays from 40 to 100 per cent, 
more for every sort of teaming than it did two years ago." 

The current history of the entire industrial organization reveals the 
same tendency, although not always so strikingly visible. 

The article teems with fine illustrations of the ruthless extortion of com- 
binations formed against the public. The chief complaint against it all 
by Mr. Baker, following the majority of the people. Is that It has replaced 
" wholesome " competition. How can it be possible to overlook the Iden- 
tity of all of this with competition? Competition is war, and successful 
war means combination and organization upon each side and discipline 
within the ranks. Our prehistoric ancestors, knowing no more than to use 
stone-axes for weapons and logs for marine transportation, knew that 
much. So, of the chaotic strife and anarchy (outside of the perfect disci- 
pline within the unions) which Mr. Baker's paper so graphically reports 
In detail, only more and more, not less, can be expected until society 
learns to condemn all competition. See the childish futility of the efforts 
of Chicago's citizens to rid themselves of this nightmare! Mr. Baker 
says: " Do not imagine that Chicago lies quiet under its yoke. It struggles 



2IO THE COST OF COMPETITION 

peculiar environment and much mitigated as to their effect 
upon the happiness of those immediately concerned. That 
Is, horizontal competition within Barter leads to : 

( 1 ) The growth of Barter-cost to a maximum and Net 
Profit to a minimum; 

(2) The establishment of a Starvation- Wage for Bar- 
ter which must be only slightly greater than the highest 
income won by skilled labor not of a professional 
sort; (for Into the choice of a professional over a 
commercial life enter other considerations than mere 
income) ; 

(3) A class of Enforcedly Idle barterers. 

and strikes out, knowing that it is hurt, but not knowing exactly whom to 
punish. Various actions for conspiracy have been instituted in the 
courts." . . . " As a prominent Chicagoan put it to me : ' It is like 
trying to fight, the circumambient atmosphere.'" But only because the 
circumambient atmosphere is supersaturated with faith in the institution : 
competition, which is the origin and source of the whole mass of iniquity. 

I am frequently asked if the social unrest which is now so plainly visible 
upon every hand is to lead to a political revolution. It is, although not 
to one of organized bloodshed by armed troops. If one wishes to gather 
an excellent detailed panorama of the Reign of Terror which is to be 
passed through by this peace-loving land before it comes out into the 
clear air after the storm, into an atmosphere purged of barter by legisla- 
tion as sharp, clear and forceful as lightning, let him but read the chap- 
ters of recent history-as-we-are-making-it currently appearing in the 
magazines, of which this article of Mr. Baker's is the most recent and 
one of the best. If this be not revolution, and a tragic sort, too, although 
little field-surgery is in evidence, then I know not what revolution is. 

(This entire portion of the manuscript was written in 1903. The evi- 
dence which has accumulated and been reported in the current periodicals 
since, and it is accumulating very rapidly, merely reinforces what is 
quoted here. At the time of the last revision of the manuscript the team- 
sters' strike, with its accompanying violence to both participants and the 
innocent bystanders, is in progress. The luscious fruit of the combination 
between employers and employees, the ** 40 to 100 per cent." rise in prices 
for teaming, has grown too luscious to permit peace — or, perhaps, the 
employees find themselves getting chiefly core and rind. It matters little. 
Temporarily the battle surges thus; soon it will surge back again. It is a 
battle, with all that battle m«ans, either way.) 



THE ECONOMIC ORGANISM 211 

The same is true of Capitalism. Its " starvation-wage " 
is the lowest rate of interest accepted under maximum 
security. Its " enforcedly idle " are the capitalists who 
will not accept this and who turn barterers and seekers 
after better investment, withdrawing their capital from 
use into idleness the while, instead. Thus it is true that 
capitalism competes with capitalism. That the process is 
unprofitable to the capitalist is plain from the fact that 
the only time that capitalism draws no interest is when It 
Is wandering in the open market, bargaining for a chance 
at Investment. Here is exemplified the universal law: 
that wherever competition exists must also exist idleness 
and loss of effectiveness.^ For capitalism to cease draw- 
ing interest Is a gain to the community, to be sure, but It is 
a loss to the capitalist; moreover. It Is better for the 
community for the capitalist to compete idly, as a capitalist, 
than it is for him to turn barterer and compete actively — 
better by the amount of that activity, which must be sup- 
ported from the community's fund of Value. 

The Increase of Pressure with Depth. Because 
the opportunity offered by environment Is most restricted 

® In July, 1905, Mr. James T. Hill, the prominent financier, published in 
the New York Herald his views upon this feature of the situation in no 
doubtful terms. His opportunity for accurate observation no one can 
deny, although his suggested explanations we consider worthless. He 
thinks that, while we are working, eighty millions of us, to develop the nat- 
ural resources of the country, from a trade and business point of view " we 
are making a poor job of it." " The country is richer far than England or 
Germany," says Mr. Hill, " and yet the fruits of trading are exceedingly 
small compared with what they ought to be." The New York Times, in 
comment thereon, says that " it is perfectly true, as Mr. Hill says, that 
* what is needed the country over is a great awakening, a sort of revival in 
its business methods, in domestic and foreign trade.' We want to rid 
ourselves of the ' hampering influences.' But here again we are groping 
our way, and although there is light enough to show the true path there 
are those among us who make it their business to see that the people's eyes 
are bandaged all the time." 



212 THE COST OF COMPETITION 

In the lowest layer and is greatest at the top, the horizontal 
pressure from internal competition will be greatest at the 
bottom and least, or nil, at the top. This horizontal com- 
petition is not so easily visible in the lowest layer. Labor 
does not spend the bulk of its time In forcing its competi- 
tion, whether horizontal and internal or vertical and 
against the upper classes, as does Barter; but the com- 
petition is there, keen and to the death, none the less. If 
the competition be horizontal, its sole weapon Is to accept 
a cut in wages, a lower grade of life, to try a further 
risk of degradation against bodily death — In short, to 
turn " scab " and accept existence at the price of growth 
and honor. If the competition be vertical. Its sole weapon 
Is the strike, to refuse existence at the price of growth 
and moral welfare. But the pressure from both direc- 
tions, from without and within. Is bitter. To resist them 
both organizations alone can be effective. The whole 
trades-union system Is obviously organized more for the 
purpose of protecting Labor from Its own suicidal Inter- 
nal competition, from its willingness to secure work at 
any price, than It Is for protection from the oppression 
of Barter from above. It prevents such economic suicide 
by force, if necessary, as Is done by law In all other cases 
of suicide. Only thus Is continuous, growing life for the 
body as a whole made possible. It is to be sweeplngly 
and confidently asserted that there Is no case of moral dis- 
sipation, of complete or fractional bodily suicide, now 
condemned by law which Is so essentially antagonistic to 
the stability and welfare of the community as Is the will- 
ingness of any man to accept a reduction of a wage 
already shamefully low; yet against It there is no expres- 
sion of public law nor, outside of the trades-unions, of 
current public opinion. 

To proclaim that Labor ought to accept employment at 



THE ECONOMIC ORGANISM 213 

any terms which it can obtain is to deprive it of its last 
rampart in its self-defense against the degenerative effects 
of Barter, is inviting a certain expansion of this very lack 
of employment. For to accept a cut in wages in order 
to get a job does not mean that more men are at work. 
It means merely that this man steps in while another steps 
out; while incidentally the wages of the entire class have 
been dropped by the amount of the cut which the one 
accepted.^ Indeed, since this retreat of Labor has per- 
mitted Barter to expand by an equal amount, the pur- 
chasing-power of the entire community is diluted and 
reduced to just that degree. The " scab " is an enemy 
to the welfare of the entire body politic as well as to his 
own class — as the traitor, seeking his own good at the 
expense of his community, must ever be. For his defec- 
tion all are much worse off and no one any better: a 
situation which calls upon the laboring community to 
repress by force the act which entails it, in exactly the 
manner and with the same right as a state represses 
treason. 

Human, artificial law does not yet dimly recognize 
the natural fact that Labor is a unit-community, subject 
to attack and oppression from without and to treason 

■^ This, for instance, is the economic explanation of the national exclusion 
of the Chinese. According to all common sense, the presence of any law- 
abiding class of individuals who are willing to work fourteen hours daily 
for less money than an American workman demands for nine hours, as 
will the Chinaman, would seem to be an economic gain to the community 
so obvious as to be grasped with avidity. But if we add to the naturally 
profitable presence of the Chinaman an artificial institutional law to the 
eifect that if he accepts a dollar for fourteen hours' work every other 
laborer must accept an equally low income, which is the competitive-wage 
law, then the presence of a minority of Chinese serves to depress the wages 
of thousands of American workingmen, to the loss of the public and the 
gain of the profit-seekers. The Chinese blessing is turned into a curse as 
thoroughly as is any other good thing which comes under the baneful 
shadow of barter. 



214 THE COST OF COMPETITION 

from within, and rightfully organizing and exerting force 
in self-protection from both. It is altogether probable 
that not until barter ceases to exist, when the confines of 
the entire political community will be found to be 
coincident with those of the unit-community of Labor and 
the unit-community of Consumers, with no Barter re- 
served as a class separate from and antagonistic to both, 
will this fact be recognized. Yet, nevertheless, natural 
law declares this to be fundamentally true, without wait- 
ing for human recognition of the fact, and coerces labor 
unions into existence with as little regard to any conscious 
desire for them on the part of the community as it does 
the militia or the police. It is the simplest of predictions 
to observe that if human law does not soon recognize and 
incorporate this basic natural fact within its fundamental 
principles, the latter must inevitably succumb, the victim 
of their own internal lack of natural life and strength. It 
is the pressure of the natural law against the artificial, the 
pulsating life beating against the dead wall of precedent 
and shaking it to its foundations, which explains the whole 
phenomenon of modern Anarchy, whether philosophical 
or nihilistic, whether that of the trades-unions or that of 
the trusts. 

Horizontal Competition within the Several Lay- 
ers of Society Compared. With Labor competition, 
whether wisely vertical or unwisely horizontal, is for 
life itself. If the chance to labor be denied or lost, 
nothing remains. The scabs have a good excuse for their 
treason : they are drowning men. But the unionists have 
a better excuse for condemning them: they are grappling 
the support from beneath their would-be rescuers. 

But with both Capitalism and Barter, on the other hand, 
horizontal competition means nothing so weighty. If the 
competitive effort against one's peer in the upper division 



THE ECONOMIC ORGANISM 215 

should fail, there Is still much left to life. The capitalist, 
at the worst, can subsist upon his capitalism until he ceases 
to be a capitalist. The hardship of that has never yet 
been demonstrated. He will then be no worse off than is 
the producer at his best. Nor does society lose thereby. 
A consumption of the capital itself, of the tools of use to 
man, would be a distinct loss to the community. But the 
self-consumption of capitalism affects not at all the capital 
upon which it Is based. It consumes merely the hoard of 
" securities," of Money-valuation, of legal control of 
Value, which past error has permitted the capitalist to ac- 
cumulate at the expense of the producer — a past wrong 
which no restitution may ever remedy and which no con- 
sumption of that hoard can ever make worse. It leaves 
that capital whole and intact, and even freer for the use 
of the community than It was before. 

Moreover, If the bargainer fail In bargaining against 
his fellows, he has lost at the game which he himself chose. 
He cannot complain. He may at any time drop the seduc- 
tive game and turn his energy Into the ultimately more. If 
Immediately less, satisfactory avocation of Production; for 
the cessation of his bargaining will release an amount of 
purchasing-power which will exert more than sufficient 
demand to reemploy his time In productive effort, If he 
really cares to earn his salt In that way. 

In all of which is visible the truth of the general state- 
ment that In vertical competition the advantage always 
does and must lie with the upper layer, that of Barter, 
over the lower, the Productive layer. 

The Actual Proportions of Distribution. If Fig. 
7 be drawn to a scale true to actual fact, the several 
areas will measure the consumption of economic activity 
In the several directions indicated by their labels. In 
other words, the Production-area measures the aggregate 



2i6 THE COST OF COMPETITION 

value produced, upon which the entire organism depends 
for its sustenance. The entire area measures the aggre- 
gate Valuation of wealth distributed. This is the equiv- 
alent of the Value produced. Therefore, the proportion 
of the total area to the production-area measures the ratio 
of inflation involved in the translation of Value into Valu- 
ation or wealth, or the Money-scale prevailing in the com- 
munity at the time. 

The areas of the several subdivisions measure the por- 
tion of this aggregate wealth or purchasing-power which 
is allotted to each class of activity, or the valuation of that 
particular effort by the community. The Value, or life- 
support, which each class receives is therefore measurable 
by dividing these several areas by the money-scale, or the 
density, so to speak, of the valuation-solution of value. 
That is, the producing division, which produces all value, 
enjoys the consumption of about one-third of it; the bar- 
ter-division (including capitalism), which produces noth- 
ing, enjoys about twice as much. 

Activities, not Populations, the Guide. But to 

fully appreciate what this distribution means It must be 
remembered that the areas of Fig. 7 do not measure popu- 
lations of individuals, but aggregate purchasing-power, or, 
in other words, economic activity in consumption, or at least 
in absorption. Hitherto we have been careful to consider 
only these activities, remembering that each Individual 
always comprises several sorts of activities within his 
daily life; also that some individuals incorporate much 
more economic activity and effectiveness than do others. 
Looking at these diagrams of the social organism, how- 
ever, it will be clear that the classification of activities 
visible therein coincides fairly closely with the segregation 
of individuals into social classes In actual life. The labor- 
ing class spends nearly all of its time In production and 



THE ECONOMIC ORGANISM 217 

scarcely any In competition : an occasional evening given 
to trades-union meetings or an occasional idle week on 
strike is all. A great many capitalists, particularly the 
larger ones, are purely capitalists; that is to say, they 
enjoy their Income idly. The great majority of bar- 
gainers do nothing but negotiate or promote. If they 
enjoy Income from both invested capital and from active 
effort in commercial life, they are even then only two sorts 
of bargainers in one. 

On the other hand, there is quite a number of Individuals 
who fail to fall wholly within any one class of economic 
society; at different portions of each day's life they occupy, 
in their varying momentary occupations, each of the 
separate levels into which we have divided all economic 
activity. Such, for instance, are the store-keepers and 
manufacturers of moderate size. Each performs some 
daily effort which is truly productive, usually in the way 
of superintendence; each has some capital invested; each 
spends a part of his time in negotiation, promotion or 
speculation. It Is these individuals who will find the 
greatest difficulty in following, understanding and accept- 
ing this analysis. Feeling subconsciously, as they do, that 
their entire life-effort is directed toward but a single end: 
the furtherance of their private business, they will find It 
almost impossible to comprehend that, when their day's 
work is regarded from the standpoint of the interests of 
society as a whole, one portion of their striving stands in 
direct annihilation of the results of another portion, that 
one portion is constructive and valuable while another Is 
destructive and reprehensible. Yet such Is the fact. 

Comparative Density of Population within the 
Several Classes of Activity. If we consider, not- 
withstanding this blurring of the lines of accepted social 
classification of Individuals by the superposition thereon 



2i8 THE COST OF COMPETITION 

of the accurate classification by activities, that the two sorts 
of classification are fairly identical, and if we then consider 
the population which evinces these different classes of 
activity as displayed in Fig. 7, it appears that its density 
is not at all the same throughout. This is important, 
because it is only by dividing by its population the total 
purchasing-power allotted to a given class that its average 
individual income and level of comfort can be known.^ 
For the population is much more congested in the lower 
layers. Whereas Production gets only one-third of the 
community's purchasing-power, it comprises some 86 per 
cent, of the total population. Competition, securing two- 
thirds of the wealth, comprises only the other 14 per 
cent. Wherefore, comparing the two Divisions, the aver- 
age individual income is obviously some eighteen times as 
great in Division II as in Division I ; which is much what 
would be expected from our general knowledge of the 
actual comparison of individual Incomes, but adduced with 
greater certainty. 

This variation In density of population In the two Divi- 
sions Is Illustrated In Fig. 9. In It Is shown, by the black 
disk in the upper portion, the population devoted to the 
activities of Division II, upon the same scale as the clear 
area of " Production " measures the population con- 
cerned In that class of Industry. That Is, the clear white 
area plus the solid black measures the total Industrial popu- 
lation; the entire area of the large circle measures the total 
wealth consumed by that population, and Its several sub- 

8 This is the only method for attaining a clear analysis of the social 
situation: to analyze activities first and then to consider population in rela- 
tion to the different species of activity. To divide arbitrarily the mass 
of individuals composing society into classes upon the assumption that 
each individual can be a member of only one class and that the lines 
which demark classes pass between, instead of through, individuals, is to 
invite at the start only confusion, self-deception and failure of progress. 




4*IIO T ^Wt S S 1 Ql I 



• Tj" u-ofsi^r^ 



9M<-troi|Dtipoaj^ 



J * UOI9I 4?(J- ^ 






220 THE COST OF COMPETITION 

areas the portions of that total wealth going to the several 
classes as units. Therefore, the shaded upper portions 
of the large circle measure the wealth going into economic 
dissipation; the small black disc measures the population 
which dissipates it — a very small eel to consume all the 
nutriment supplied by a current so large in cross-section as 
the entire shaded portion, even supposing that it is neces- 
sary to have any barter at all, and truly a heinous blot upon 
the intelligence of our modern industrial civilization. 

Barter-Cost. The lighter outer portion of the disk 
measures the population receiving the barter-cost, with 
which the true barterer, .occupying the inner disk of solid 
black, always surrounds himself, as a spider with a web, 
in order to catch trade. The individuals occupying this 
outer zone enjoy, of course, the same average individual 
income for a given grade of skill as do the occupants of 
the production-layer, because they draw wages in wage- 
competition with them. But because the barter-cost 
people, consisting chiefly of clerks, stenographers, sales- 
men, drummers, the printers and painters of advertise- 
ments, and, last but not least, the civil lawyers, include very 
few unskilled laborers, they represent a somewhat higher 
average of skill, intelligence and education than do the 
producers in factories, and therefore average larger in- 
comes. Nevertheless, because the average income allotted 
to all wage-earners by Barter is so small, compared with 
that reserved to itself, this outer ring of earners of barter- 
wages, constituting some 53 per cent, of the population of 
Division II, receives only 4.2 per cent, of the total income 
absorbed by that Division and measured by the shaded 
areas of the large circle. This leaves the remaining 95.8 
per cent, of it to be absorbed by the solid portion only of 
the black disk. 



THE ECONOMIC ORGANISM 221 

Non- Industrial Population an Additional 
Factor. It Is to be noted, finally, that the diagram refers 
solely to the active Industrial population. If it be remem- 
bered that the Individuals active In the production-layer 
average a much larger dependency upon each one of them 
for support. In the form of a non-Industrial household 
population, than do those of the upper layer, who usually 
maintain quite small families. It will be plain that, women, 
children and invalids included, the diagram quite fails to 
do justice to the largeness of the community fed by the 
white area and exaggerates the population to be repre- 
sented by the black disk as supplied with income by the 
shaded areas of the large circle.^ 

The Effect of Distribution by Means of Barter 
upon the Welfare of the Individual Producer. 

Further light upon the economic conditions of the individ- 
ual may be had from Fig. 10. It shows the distribution of 
Value by Barter to Individuals of differing degrees of 
natural productivity. In Fig. 10 the coordinate axis 01 
measures individuals of the body economic and the axis 
OP their respective individual productivities. That is to 
say, each element of horizontal measurement, mathemati- 
cally called dl, would represent one economic individual, 
the smallest item to be considered sociologically, the social 
atom. If the diagram is to apply to this nation as the 
community to be represented, the abscissa OK would be 
divided Into some thirty millions of such parts, each repre- 
senting a single worker. 

® In order to avoid a possible confusion, it will be repeated that, in the 
sense that a population is fed by him who produces the things consumed, 
the entire community is fed by the white area of Production alone. In the 
sense that a family, a class or a community is fed by the current purchas- 
ing-power which reaches it and is distributed among its members, with- 
out any thought as to whose eiforts actually produced the Value of that 
purchasing-power, the above statements are true. 



"121 



COST OF COMPETITION 



The resultant gradation of individuals according tQ 
their natural productivity is shown by the curve AG^ the 
ordinate p of which would measure the productivity of 
each individual respectively. The greater number of indi- 
viduals possess a small or medium productivity, while only 
a few attain to the highest degrees of efficiency. 

This insures that the aggregate productivity P of any 




L H K I 

Fig. 10. The Fate of the Individual Producer's Productivity 

portion of the Industrial community must be measured by 

an area, the number of workers Involved multiplied by the 

Industrial productivity or height of each In average. That 

Is to say, ^ 

P=fpdl 

Thus, the total area beneath the curve AG, or the area 
OAGK, must measure the integrated productivity of the 



THE ECONOMIC ORGANISM 223 

entire community. It therefore must be equal to the area 
of the entire circle of Fig. 7, when measured In Valuation, 
or of the white portion of It when measured In Value. 

Of the value produced by each Individual who has found 
employment one portion goes to economic dissipation and 
the other returns to him as wages of purchasing-power. 
The former Is divisible Into rent, Interest, barter-cost and 
net profit. In Fig. 10 the wages-portion is measured by 
the ordlnates HE, KF, etc. The portion dissipated in 
barter-cost is measured by the ordlnates EB, FC, etc. 
The portions dissipated In the forms of rent. Interest and 
net profit are lumped together and measured by the 
ordlnates BD, CG, etc. According to this, HE represents 
the starvation-wage for the producer, EB the minimum 
cost of barter with which his produce can be marketed in 
the given prevailing stage of economic progress, and BD 
the smallest return, the " starvation-wage," for which the 
bargainers will handle the stuff. Subtracting the various 
costs of competition, which range upward from this mini- 
mum, from the various degrees of productivity, which 
range upwards from i/Z), there results the curve EF as 
the one revealing the wage-earning capacity or purchas- 
ing-power of the various individuals.^ 



10 



10 In order to avoid possible misunderstanding, it is pointed out that the 
diagram reveals, on its horizontal scale, only individuals of the producing 
class. The areas above EF measure quantities of barter-activity per pro- 
ducer. That is, let the little area EhH measure the productivity of, say, a 
thousand producers; the areas above it, between the same ordlnates, would 
measure the activity of that unknown number of barterers which was en- 
gaged in marketing the produce of these thousand producers. The area 
DbB may be supposed to represent the activity of a thousand negotiators 
and BeE that of a thousand individuals devoted to barter-cost; from which 
it would appear that one thousand negotiators would employ about two 
thousand assistants in handling the produce of about three thousand pro- 
ducers. The horizontal scale of the diagram, which is primarily designed 
to be illustrative of relations, could not be made sufficiently correct, how- 
ever, to warrant any such deductions as to numerical proportions from it. 



224 THE COST OF COMPETITION 

Any individual, in order to find employment, must 
evince sufficient productivity to first make good the least 
possible cost of competition (including both barter-cost 
and net profit) over his value-produced, and still have 
wages enough left to support him in that grade of life 
which will warrant steady effort at labor, rather than at a 
mere discontented search after something more endurable 
even if less honorable. The minimum wage acceptable, 
the starvation-wage, is visible at EH, the minimum cost 
of competition connected with its receipt from circulation, 
all factors included, being ED. Therefore the least indi- 
vidual productivity which can find employment is their 
sum, HD. All individuals possessing less productivity 
than HD, or those occupying the field between OAand 
HD, must remain more or less unemployed. 

Their graded degrees of productivity are shown by the 
ordinates between HL and DN. From these several pro- 
ductivities, before any of them can return any income to 
their owners, must be deducted the minimum cost of 
marketing their produce, or ED. This abstraction results 
in the curve EL, measuring their wage-earning capacity, 
just as EF does that of the individuals possessing a greater 
productivity. But, all of the ordinates beneath EL being 
less than HE, none of these individuals can receive even 
the stravation-wage; they are all more or less unemployed. 
They taper off into greater and greater economic submerg- 
ence into want, toward the point of complete idleness and 

Each barterer employs, in actual fact, about six producers, instead of three. 
The vertical scale, though, is as true as possible. 

Nor is it to be deduced from this diagram that the barterers receiving 
the minimum return for barter, BD, are engaged in marketing literally 
the produce of the particular producers of minimum productivity, HD, 
earning the starvation-wage HE. Indeed, the rule is almost the opposite; 
that is, it is the negotiators individually winning the greatest returns who 
are engaged in handling the produce of the lowest grades of labor, earning 
the meanest wages. 



THE ECONOMIC ORGANISM 225 

a zero-wage at L, beyond which Is the hopelessly Sub- 
merged Tenth. 

This shows why the curve ANDG may take Its origin 
above the zero-point, Instead of in It. If the diagram were 
made to include the sick and the violently insane, the curve 
ANDG would have to originate at O.. But as this is a 
study in economics, those Individuals biologically wanting 
in all economic self-helpfulness are excluded. But there 
are plainly many individuals who are at present counted as 
of no economic value, and therefore left without employ- 
ment, who in reality possess considerable productivity — 
quite enough to be self-supporting were they free to pro- 
duce and exchange without being taxed for the cost of 
barter. It will be noted that practically all of these indi- 
viduals between HD and OA possess productivities greater 
than EH, the present starvation-wage for regularly em- 
ployed labor. It does not pay anyone to employ these 
creatures, however, nor can they work on their own respon- 
sibility and find a market for their produce, because of the 
artificial depression of the valuation of all they produce, 
and the inflation of valuation of all they buy, by the pres- 
ence and cost of barter. The cost of getting their produce 
through the markets and back to them in consumable goods 
Is too great to leave them anything worth having. There- 
fore the better of them (those to the right of L) potter 
at odd jobs and succeed in turning up a partial self-support, 
to the amount measured between EL and HL, They 
have no regular employment and what they earn is less 
than the starvation-wage; they partly subsist upon charity 
and partly die. Those to the left of L can do nothing 
to earn anything. They constitute our paupers, tramps, 
prostitutes, criminals and the feeble-minded. 

But It Is plain that If the cost of competition, ED, were 
removed, the productivity of all of these people would be 



226 THE COST OF COMPETITION 

sufficient to maintain themselves, In the great majority, In 
a scale of comfort greater than that now enjoyed by the 
self-respecting laboring classes. This statement. In fact, 
leads the mind to fall back Immediately upon the law 
already established: that the natural productivity of any 
whole person, when undiminished by cost of barter, exceeds 
his natural tendency to consumption. So that for even 
the feeble-minded, asking very little here below, their 
natural productivity would suffice for comfortable self- 
support. Other care than purely economic they would 
of course need; and the sick, the Insane and the Inveterately 
criminal would also need care, of both economic and ethical 
sorts. But if barter were removed and the true self-help- 
fulness of each were thus permitted to be utilized to the 
full, It would be found that the great majority of Individ- 
uals who now appear as burdens upon society possess a 
productivity quite adequate for their self-support. 

Summary. These diagrams complete our general Ideas 
as to the present distribution of wealth. The bargainers 
get the lion's share, the producers get what is left. Then, 
of this maximum going to the bargainers some individuals 
get the most, others get an average, many the starvation- 
wage for that class; while the unemployed of the bar- 
gainers do not get even that, but drop slowly and reluct- 
antly out of business and Into production or crime. 

Of the medium return going to capitalism, some of the 
latter, which takes risks and does it skillfully, gets the 
most, the majority gets the standard rate of Interest, while 
a last portion constitutes its " enforced idle," and steadily 
but slowly loses itself by absorption In current expenditure 
until Its owner ceases to be a capitalist and becomes wholly 
dependent upon his daily efforts, either as a bargainer or 
as a producer, for his livelihood. 



THE ECONOMIC ORGANISM 227 

Within the layer of Production, which gets the mini- 
mum portion, skilled labor, including the professions, gets 
the most of it, unskilled labor gets the next portion and 
the Submerged Tenth the least of all. It needs to be 
noted here that, whereas the ablest producer (outside of 
the technically skilled) is only slightly worse off as to 
income than the poorest bargainer, the poorest producer 
gets a minimum portion of a minimum portion: a sort of 
third trituration of the community's current income; upon 
which diluted diet he naturally slowly degenerates. 

In following this analysis it must be remembered 
throughout that It Is ever fully recognized that, as society 
is organized to-day, the great majority of the Individuals 
following bargaining methods are entirely unaware of 
doing anything reprehensible or destructive to the common 
wealth or to the character of the community. They are 
animated to effort only by Innate energy which must come 
out, and by the most natural instinctive zeal to succeed and 
to provide for their families. They are guided, not by 
careful analysis of the right or wrong involved In their 
each relation with an ultracomplex Industrial organiza- 
tion, but by a passive acceptance of institutions and opin- 
ions as they find them. That the resultant effort should 
take upon itself all the destructive characteristics of the 
competitive system Is not because all bargainers are mali- 
ciously inclined, or even Indifferent to the interests of the 
community, but because public opinion misdirects and per- 
verts their natural activities away from productive and 
useful Into competitive and destructive channels. More- 
over, the Institution fastened upon us by chance, by tradi- 
tion, Is further clinched home by this same public mis- 
apprehension, in that It befogs and conceals the real Issue 
by attributing the blame for the entire evil to the moral 
obliquity of those who are the victims, rather than the 



228 THE COST O^ COMPETITION 

cause, of the whole phenomenon, and by excusing, by even 
rewarding and honoring, those who are chiefly the cause of 
its perpetuation. 

Nor is it the leaders in barter who are wholly to blame. 
It is not so much the hundreds who are engaged in " cap- 
turing '' railroads or cornering wheat as it is the millions 
engaged in haggling over every ten-cent retail transaction, 
who do the bulk of the harm. But it is as leaders of public 
opinion and legislation that these captains of barter are 
chiefly to blame ; for it is the law, the unwritten more than 
the written, within whose coils the consciences of us all 
struggle helplessly. So vicious is this institution of uni- 
versal barter in its nature, that whatever promptings of 
conscience as to the propriety of his deeds the individual 
captain of barter may feel, he is helpless to alter them 
except by complete abandonment of the commercial field. 
If he be too scrupulous to make exaggerated profits, he will 
soon be forced out of business, or to take a salaried posi- 
tion under a consolidation, by those more willing to do so. 
The competitive system, defined in a nutshell, is the arti- 
ficial selection of the most selfish for survival. 

Whatever may be this blame, for the adoption or for the 
continuance of Barter, it is not the present duty to discuss 
the ethics of the situation further than to point out that 
they are distinct from the economics. How far this insti- 
tution of Barter may react upon the ethics of the individual 
and of the community will be discussed in Part II. 
Our duty here is to demonstrate beyond question two 
things, viz.: 

( I ) The exact definition and character of the economic 
relations between man and man which are now absolutely 
forced upon all of us, whether millionaire or miser or 
minister of the gospel, by the consensus of law and public 
opinion, and their inevitable detrimental effects upon the j 



THE ECONOMIC ORGANISM 229 

material welfare of the community and the majority of 
its individuals; 

(2) That this phenomenon is the result, not of individ- 
ual greed, however prominent that may have become as 
Itself a resultant revelation, but of an abstract institution, 
a mere intellectual compact, alterable by argument and 
agreement (whereas avarice Is not), to the effect that the 
only and the best way to determine the unknown price of 
anything is by duello of brain and nerve; for the pressure 
upon the oppressed of the land is not measured or deter- 
mined by the quantity of greed on hand, but by the QUAN- 
TITY OF ACTIVITY EXPENDED IN BARTER AND IN BARTER- 
COST. Whether that activity be the result of miserly 
avarice, of the gamester's pleasure In accumulating millions 
which he cannot enjoy, or of the most humane desire to sup- 
port wife or child or aged parent, makes not one whit of 
difference in the economic result. It is the evil of the 
competitive system that It forces activities originating in 
motives as dissimilar as these to take the same form and to 
produce the same result. 

(3) That, in spite of the common belief that our laws 
and polity of property and business are founded upon the 
principle of conserving to each the value which he pro- 
duces, as one of the fundaments of justice, yet it Is true that 
into the existent method of distribution of wealth this 
principle enters to only a minor degree. To just what 
degree it enters remains yet to be seen ; but that the degree 
must be a minor one Is evident from the now demonstrated 
fact that the Incorporation of this elementary and obvious 
principle of mere justice cannot be complete until we have 
eliminated from our economic system all rent, all interest, 
all commercial competition and all barter over prices, 
whether of commodities or of labor, and have permitted 
them to be replaced, by natural gravitational flow of 



230 THE COST OF COMPETITION 

supply and demand, with that flood of emulative activity 
in production which Is now dammed back into potentiality 
by their presence. 

This demonstration has now, with the completion of 
the analysis of Distribution by Barter, become accom- 
plished — at least as a skeleton, as a structure fit to stand 
and to support the life and beauty which it Itself lacks. 
To round out this frame-work into a fit and attractive ex- 
planation of the world of men and affairs, as it appears 
about us to-day, is needed some study of the way In which 
it happened to be, of how this chance Intellectual agree- 
ment upon method, so simple, so natural and so harmless 
In its original elementary form, should have grown into a 
thing so hateful as modern commercial competition, that 
gigantic " yellow " Institution which has now come, like 
dodder In a rose-garden, to overrun, undermine, half-choke 
and discolor to the eye one of the most wholesome and 
promising civilizations which the history of man has ever 
recorded. 



X 

THE GROWTH OF DISSIPATION 

AN Analogy. This entire proposition : that competl- 
/-\ tlon, which on the surface appears to be effort 
X -Al. directed solely at the Increase of trade and the 
only medium whereby consumers are Induced to purchase, Is 
Inherently and Inevitably only a dissuader of trade, because 
a destroyer of purchasing-power, Is to the average person 
one sufficiently novel and startling to justify further effort 
at its clear understanding. To this end let It be supposed 
that a primitive community of workers, lacking communi- 
cation with other peoples and having no other plan of life 
than the customs Inherited from its fathers, should have 
adopted the national habit of spending each forenoon In 
tilling the soil, herding cattle, hunting game, etc., and of 
devoting each afternoon to a foot-race for the pooled 
results of the day's productive efforts, as the only known 
method for apportioning its distribution throughout the 
community. 

"In the first place, under such a plan, the pool would 
naturally be divided Into more than one prize. There 
would probably be a first, a second and a third capital 
prize, for instance, of graded value. Then would follow 
a number of consolation-prizes, awarded to all who finished 
within a certain time limit. But If there Is to be a race at 
all. In any proper sense of the term. It Is obviously essential 
that there be fewer prizes than racers. That is. If the 
capital prizes are to be appreciably more than an average 
day's produce each, many of the racers must receive 
nothing at all. 

231 



232 THE COST OF COMPETITION 

If the simile should be brought home to our present 
national economic life, the capital prizes would have to be 
described as being thousands of times as valuable as the 
produce of even an exceptional man. There would be 
millions of consolation prizes, each returning to its winner 
so small a fraction of the day^s produce that he would 
only just be fed into fitness for the next day's race, and no 
more. There would be tens of thousands of runners In 
excess of the number of prizes. 

In any such a race for wealth, or for competence, or 
for bare life Itself, it is obvious that the average speed of 
the runners has nothing whatever to do with the welfare 
of the community. They may run, on an average, four 
miles or fourteen or forty to the hour: the result is the 
same. The total amount of produce has not changed, 
except that more of it Is needed to keep up the pace and 
less strength Is left for value-production on the morrow. 
The riches of the commonwealth have not been altered, 
except that they become smaller, in proportion to the 
strenuousness of life, as competition becomes more keen 
and skillful. Only identity of ownership has been settled 
by the race; distribution of wealth, not production of 
value, has alone been accomplished. 

Again, the average speed of the community of racers 
has nothing to do with the proportion of winners or of 
losers. The pace may become terrific ; It may astonish the 
outside world; yet the track will reveal the same propor- 
tion of panting, distanced and discouraged tail-enders as 
at an earlier time of easier pace. In actual life In this 
country this fact Is prominently visible. The average 
productivity of the individual, the aggregate productivity 
of the community, has been enormously increased, by labor- 
saving invention, by elevation of the standards of public 
intelligence; the average speed of production Is terrific, 



THE GROWTH OF DISSIPATION 233 

compared with anything yet recorded by history; yet the 
mass of humanity Is no richer In happiness than under the 
simpler, less productive, bucohc life of the early nineteenth 
century. The slums are larger than ever, the prisons and 
almshouses are better filled. Behold progress and 
poverty ! 

Again, the efforts of any one runner cannot possibly 
help anyone but himself. He may lift himself from tenth 
place to ninth. He wins more, but the community Is no 
richer. Worse than that, he has inevitably displaced some 
other runner from ninth place to tenth. No racer can win 
except at someone else's loss. For the higher altruistic 
promptings of the human soul there Is absolutely no possi- 
bility of expression or survival In the racing system. The 
only method by which gain can be made not at some other's 
loss is by productive effort, by effort exerted upon Mother 
Earth, not that aimed at Brother Man. 

But in our Illustrative community such productive effort 
is confined, by written and by unwritten law, to the earlier 
portion of the day, and Its results go Into a common pool. 
It is only the afternoon's racing, not the morning's agricul- 
ture, which can bring home an Income to any man. That 
in this respect our simile Is quite in parallel with modern 
industry Is clear if it be remembered that each producer, 
— selling his labor at a generally established rate of wages. 
Instead of himself selling his product In the actual market, 
while the material results of his labor are literally mixed 
indiscriminately in with the goods produced by his fellows 
before sale takes place (the universal factory-method), — 
actually does cast his produce Into a pool to-day. What 
he Is to get out of it Is determined almost entirely by the 
activity and skill of bargainers In distant cities, whom he 
never even sees and over whose actions he has absolutely 
no control, while his own productive zeal plays a quite 



234 THE COST OF COMPETITION 

minor part in the question. With these mightier men he 
is forced, by natural law, to cooperate in the general task 
of landing in the consumer's hands the goods needed by 
society for its support. With them he is also forced, by 
custom and by artificial law, to pool the issue as to what 
purchasing-power is to return to each — just as thoroughly 
and inevitably as would the lamb and the lion in the same 
den be forced to pool the issue of an encounter, with only 
one dinner visibly available for the two of them. 

It is finally to be noted, in connection with this illustra- 
tion of the racers for the community's pooled production, 
that not all the teachings of the moralists, nor even the 
customs of centuries, could force such a people to restrict 
their racing to any prescribed hours of the evening alone, 
when once the legality of the institution were admitted by 
law and public opinion and its marked superiority over 
productive effort as a means of acquiring wealth and 
power were recognized. Natural appetite or unnatural 
avarice, wholesome emulation or noisome ambition, 
whichever you please, would lead each man of acumen and 
ability to deliberately neglect productive effort in order to 
save his strength for the much more profitable racing. A 
portion or all of the morning would be spent in training, 
in scouting for weak points in one's adversaries, in learn- 
ing the track or in a thousand of the more questionable 
means which always accompany a race for stakes, whereby 
his chances for winning might be enhanced. He might 
see, or he might not, that his absence from the morning's 
productive duties diminished the total wealth of the com- 
munity; if his afternoon's success brought him a much 
larger portion of the slightly diminished total, his essential 
desires would be satisfied, and both intellect and conscience 
would be dulled into acquiescence. 

It is plain, too, that the race-track would soon come to 



THE GROWTH OF DISSIPATION 235 

display only the most fleet of foot In the community. 
Some there would be, Indeed, even among the poorest 
runners, who, because they loved sport, excitement, and the 
spirit of gambling, or because they had never been educated 
to do a day's work, would return to the track and race, 
day after day, although almost always losers. But the 
majority of the losers would soon sicken of the hopeless 
task and of the race-track atmosphere; they would either 
hire out their afternoons at productive labor to the com- 
munity for what return they could get, or they would 
devote that time to work done for the mere love of It, to 
music, art, literature or science, asking no other return 
than the pleasure of doing and the sense of aiding humanity 
in Its real progress. 

Thus would the lapse of time necessarily result In a 
number of things, viz. : 

(i) The expansion of the racing-habit to Include all 
of the time and strength of the best men of the community, 
leaving In the fields only enough of productivity to produce 
the necessary valuable prizes. Thus would grow the re- 
striction of production and the extension of poverty. The 
relegation of all agriculture, milling, weaving, etc., to the 
squaws among the American Indians was but a natural 
illustration of this process. 

(2) The steady growth of keenness of racing, due to 
the increased number of runners, and of the aggregate 
value of the prizes in consequence; thus would grow the 
intensity of poverty. 

(3) The specialization of all of the best talent in the 
country out of productive lines of effort and Into racing. 

(4) The artificial breeding of racers, by the unusual 
opportunities for survival accorded to racers and the un- 
usual obstacles to survival placed before ability so mark- 
edly productive In its tendencies as to utterly refuse to race, 



\ 



236 THE COST OF COMPETITION 

until the community, or this portion of it at least, became 
essentially a racing species of the genus homo. 

(5) The gravitation of the racing itself into a species 
of trade, carried on by jockeys or runners, while the real 
money was made and the power retained by those who 
merely wagered as to the results or dealt in " tips " for 
the guidance of others. 

(6) The control of the entire community, in both Its 
productive and its social life as well as in its more formal 
political organization, by race-track standards and consid- 
erations; for the racers would inevitably constitute the 
" successful " class, the aristocracy. All that is weak and 
superficial and mercenary in humanity would fawn to them 
and to their success and would gladly play into their hands 
for the sake of a sycophant's reward: flattery, contempt and 
abuse. Laws would be made and foreign policies framed 
to protect and foster racing as the one avocation of man- 
kind worthy of national consideration. Formally and in- 
formally, by written and unwritten law, the racers would 
absolutely rule the community. The distribution of all 
wealth above that going to feed the fieldhands would He 
in their hands. The material rewards of life would be 
theirs to dispense. Any perversion of life into the ac- 
complishment of their desires which could be hired would 
be at their command. Votes could be baldly purchased 
when needed. In less dire need, the public opinion which 
scorned such methods as beneath it, and which prided itself 
upon sterling independence, could be led by the nose into 
the same noose, with a little shrewdness, because of its 
childish subservience to the fashions and the fads of the 
powerful few and its blind faith in racing for pooled pro- 
duce as an institution essential to production itself — with 
which, however, it obviously has no natural connection. 

The primary expression of the power of this figurative 



THE GROWTH OF DISSIPATION 237 

'' turf " would be the Insistent demand for larger and 
larger capital prizes. It would be represented to the 
people that the race-course was growing tremendously as 
an Institution (which would be the truth) ; that It could 
not be operated with a magnificence and luxury commen- 
surate with the nobility and Importance of said people If 
the capital prizes were not allowed to be enormous (which 
would be true if the race-track had anything to do with 
or for the people, which it did not) ; and that unless these 
prizes were rapidly Increased by the people the racers 
would refuse to race at all (which would be the baldest of 
lies). For, In the first place, the people would be much 
better off with the abolition of racing for their wealth 
altogether; in the second place, if the supply of million- 
dollar prizes were cut off, the sporty people would still 
jockey for the thousands, or the hundreds, or the stray 
pennies even, which were permitted to be available for that 
purpose. Not so magnificently, of course, nor so profit- 
ably; but as the whole race-track enterprise was a burden 
upon the value-producing people and an obstacle to the 
progress of the entire community out of the atmosphere 
of feudalism and the joust, that would constitute only a 
gain. For it is the comparative size of these capital 
prizes which alone determines the scale of race-track ex- 
travagance and of the property of the non-racers. Neither 
the average productivity of the producers nor the average 
speed of the racers has anything to do with It; either may 
be, and Is, increasing indefinitely without any ameliorative 
effect whatever, because the capital prizes are simulta- 
neously increasing In greater comparative proportion. 

The Reality. All of this, and more, this country 
exhibits to-day, to a degree surpassing any other nation on 
earth. The above conditions are true to life. It is true 
that every producer is actually forced at present to consign 



238 THE COST OF COMPETITION 

his produce to a public pool. For he must sell either it or 
his labor. Grant once that: that he cannot consume the 
actual produce which he himself digs from natural oppor- 
tunities; that he must convert it, in public market, into a 
portion of circulating medium lacking any characteristic 
identity with his own handiwork; and that he must effect 
a second exchange of this money for goods regarding the 
price of which he has no possible thing to say — and the 
whole proposition is granted. The price which he receives 
for his labor is merely society's warehouse-receipt for his 
time put in, supposedly (but only supposedly) the equiv- 
alent of the goods created and stored there by his effort 
and to his credit. It expresses society's valuation of his 
efforts ; but there Is no natural relation, still less an equiv- 
alence, between that valuation and the real value to 
society of what he has done. His goods are gone from 
him, hopelessly, irretrievably. It were starvation to try 
to retain them. They will support society, but they will 
not support him. To society they possess value; but 
society does not return to him value for value received. It 
gives him valuation Instead : a warehouse-receipt, the value 
of which to him lies controllable in other hands — con- 
trollable, at least, to a depreciation of Its natural value, 
although never to an increase. 

Grant, further, the proposition that any man may buy 
as cheaply as he Is able and may sell as dearly as he can, 
and It is granted that he may make this producer's pur- 
chasing-power as little as might, and might alone, per- 
mits him. By control of the price of goods In the open 
market, by barter, by pure race-track methods, he may 
stamp that warehouse-receipt, that certificate of Valuation 
only, with what negotiability for real Value he Is able. 
The law's permission rests upon no other limitation. 

Grant, again, that no man may sell his labor or buy his 



THE GROWTH OF DISSIPATION 239 

supplies without meeting this might opposed to his, with- 
out exerting his httle own against it, and it is plain that 
each producer must either race or else hire a substitute: 
for which purpose he usually finds the much accursed walk- 
ing-delegate the cheapest and most efficient one available; 
cheaper, at any rate, than the corporation-lawyer, whom 
also he hires, indirectly. 

He, in actuality, as Consumer, has only his warehouse- 
receipt to show for his productive efforts, as certificate of 
his laboring citizenship. That receipt does not itself com- 
mand consumable commodities; it merely entitles him to 
enter the race as one of the citizens who formed the pool, 
to see, in the determination of prices thereby, what amount 
of commodities his membership is to command. If he 
wins, his certificate is exchanged for a capital prize; it is 
accorded an egregiously exaggerated, artificial valuation. 
He can then present it at the national warehouse and re- 
ceive, of the sort he chooses, incomprehensible wealth of 
real value^: steam-yachts, automobiles and Newport cot- 
tages. If* he loses in the race, his warehouse-receipt be- 
comes almost worthless; an egregiously diminished, arti- 
ficial valuation is stamped thereon; it Is practically can- 
celed. He can present it at the warehouse and starve 
contentedly until next day upon what it brings him, or he 
may tear it up and go and jump into the river; it is all 
one to the racers. They are not their brother's keeper. 
He had his chance to race.^ 

^The "Free Social Contract."— At the railway-station one morning, 
while awaiting the readiness of my train, I found myself examining the 
locomotive and pondering upon the "free social contract." Suppose, 
thought I, that before we reach, the city it develops that this locomotive's 
boiler IS defective and bursts, or that some switch-gear has rusted half 
through without repair, or that some distant freight-agent has permitted 
lumber or dynamite to be loaded improperly. An accident ensues. V^e 
are killed, maimed or, at least, lose property. Yet the railroad com- 



240 THE COST OF COMPETITION 

To see this process, in all its bald atrocity, deliberately 
adopted as the national one by any community, would 
stamp that people as a savagely brutal one. The injustice 
of the process is too plain to permit escape from that con- 
clusion. Fortunately for one's respect for his fellowmen, 
in the actual competitive system of the present day the rela- 
tions are not so visible, so naked, in their grossness as in 
the illustrative racing-community; they are too intricate. 
Nor have they been deliberately designed and adopted, as 
the illustration supposes ; they have been blindly inherited 
from a brutal past. But they are quite as unjust as has 
been described. Indeed, they are far more so. Words can- 
not reproduce the inequity, the cruelty, the indifference, the 
rapacity and the utterly heedless waste of even the known 
facts of the competitive system, when viewed in the light 
of clear analysis. Who can say what horrid truth would 
be revealed by a similar analysis of the unknown and un- 
knowable facts? If a purely biological, individual evolu- 
tion had brought man, after all these centuries of opportu- 
nity for moral growth, to the point where a few men were 

pany, let us suppose, will refuse all responsibility because, forsooth. It was 
our business, as sane adults as well as passengers, to see that all of these 
things were right before we engaged our passage ! 

Such a position would manifestly be unjust to the point of absurdity, so 
obviously unjust that it would not be countenanced by law. And 
yet the supposed attitude of the railroad company would not be one 
whit more absurd nor unjust than their very commonly taken position 
that the price paid for their tickets is a free contract, to which 
the buyer is as free and responsible a party as is the seller. The 
factors which go to determine the selling-price of the ticket are no 
less multitudinous, intricate, technical and remotely beyond the control 
of the buyer than are the details of construction and organization 
which affect the safety of railroad travel. Why, in the name of com- 
mon sense, should the law feel obliged to protect the individual in his inno- 
cent helplessness in the face of the latter and not before the former? To a 
minor degree it does, of course; but so soon as it is urged that ordinary 
justice demands that that degree be made a major one, action is blocked by 
the cry that the responsibility of individual initiative Is being diluted. 



THE GROWTH OF DISSIPATION 241 

permitted to still exert, consciously and Intelligently, such 
immeasurable cruelty upon so many of their fellowmen, 
all hope and faith must be lost. The belief In human 
degeneration, Instead of salvation, with time would be 
inevitable. But the saving clause to our faith In human 
affairs Is the unconsciousness and ignorance of the major- 
ity, and the helplessness of the minority who alone seem to 
feel and see that something is wrong. The bulk of the evil is 
done by the bulk of the people, by simple everyday bargain- 
ing. The keenness of pressure Is put on by the few abler 
bargainers. It Is true, but only because the lesser bargainers 
aid and abet them, anxious to do the same were they only 
able. Neither big nor little can stop until all agree to 
stop. The wholesomeness of the chastisement Is shown by 
the fact that the price of its first alleviation, after all these 
centuries of humanity's refusal to believe that mankind Is 
really a unit, can come only from absolute unity of action. 
But the agreement Is not yet. Neither big nor little 
bargainers yet see the real cost of that bargaining, the 
cruel cost of the universal agreement to disagree as to 
price. 

The Evolution of Barter in America. In order 
to investigate the extent to which these lines of develop- 
ment have actually taken place within our own country 
during the last half-century, recourse has been had to the 
statistics of the United States census, from 1850 to 1900, 
Inclusive. 

In attempting to distinguish between productive and 
competitive effort therein Is promptly met the difficulty that 
Its classification takes no cognizance of this distinction 
which we wish especially to bring out, but Is based instead 
wholly upon distinctions as to Individual avocations. In 
reducing this classification to the only scientific one 



242 THE COST OF COMPETITION 

(albeit one Impracticable of adoption In census-enumera- 
tion) , viz. : by nature of economic activity, a fairly free 
method of translation has to be adopted. For instance, 
all " merchants " divide their time between productive 
and competitive effort, the proportion varying with the 
size of the business. The same is true of the manu- 
facturer. In such cases a broad estimate must be made 
of the general proportion between the two sorts of effort 
which probably exists throughout the entire occupation, 
as an average. No one of the occupations, In fact, exists 
purely as labeled In the following classification. Those 
classed as '' wholly competitive," for Instance, do accom- 
plish some production of Value. Those classed as 
" wholly productive " do conduct some competition. But 
In each case the bulk of time and strength is expended 
in one of the two sorts of effort, while only a small por- 
tion goes to the other. In such cases the occupation 
is assigned bodily to one or the other classification, the 
Inaccuracy due to the presence of the tithe of the other 
sort of effort in each of them being considered as mutually 
canceled. Many of the less important occupations, how- 
ever, are so near the line between two classes as to make 
decision as to their destination difficult. In all such cases 
the effort has been to throw one doubtful case In one direc- 
tion and another In the other, that they might balance 
each other and reduce the error to a minimum. 

The list of classified occupations of the United States 
census is therefore divided, for present purposes, into 
four divisions or classes. The first. 

Class A Includes all occupations deemed to be wholly 
of a competitive or bargaining nature. This class of occu- 
pations would practically disappear were barter done 
away with. 

Class B Includes occupations both competitive and pro- 



THE GROWTH OF DISSIPATION 243 

ductive in their nature. This class would be largely 
diminished in numbers and quite altered in aspect were 
bargaining to cease. 

Class C includes occupations which, while they might 
be wholly productive in their nature were there no com- 
petition going on, are at present largely perverted into 
the aid and comfort of barter, or, in other words, devoted 
to Barter-cost, This class of artisans would not neces- 
sarily decrease in numbers with the abolition of barter; 
it might be considerably augmented ; but the nature, direc- 
tion and value of Its efforts would be substantially 
reversed from what they are at present. 

Class D includes those occupations which may be 
styled wholly productive. It is the class into which 
all the others would be merged, as to their economic 
effect upon the commonwealth, were all barter to be 
abolished. , 

This classification runs as follows: 

Class A. — Entirely Competitwe: 

Agents and collectors; 

Auctioneers ; 

Bankers and brokers; 

Commercial travelers; 

Officials of banks and corporations. 
Class B. — Chiefly Competiti've, but partly Productive: 

Hucksters and peddlers; 

Lawyers; ^ 

Manufacturers and officials; 

Merchants and dealers ; 

" Other Persons " in the Division of " Trade and Trans- 
portation " ; 

Publishers ; 

Theatrical managers, 

2 The lawyers devoted to civil law belong in Class C ; some of them, 
indeed, in Class A. Those devoted to criminal law belong in Class D. 
Because the census draws no line between the two sorts the entire occupa- 
tion was placed in Class B. 



544 THE COST OF COMPETITION 

Class C. — Producti've by nature, but contribuiwe to Competition: 

Bookkeepers, clerks and salesmen; 

Draymen, hackmen and teamsters; 

Electroplaters and engravers; 

Hotel-keepers ; 

Livery-stable keepers; 

Messengers ; 

Newspaper carriers and newsboys; 

Packers and shippers; 

Printers ; 

Stenographers and typewriters; 

Telegraph and telephone operators and linemen. 
Class D. — Entirely Producti've : 

All of the Division of " Agriculture, Fisheries and 
Mining " ; 

All of the Division of " Professional Service " except law- 
yers and theatrical managers; 

All of the Division of " Domestic and Personal Service " 
except hotel-keepers; 

All of the Division of " Mechanical and Manufacturing 
Industries " except electroplaters, engravers, printers, 
publishers and " manufacturers and officials " ; 

Boatmen and canalmen ; foremen ; hostlers ; pilots ; porters ; 
sailors; steam and street-railway employees; undertak- 
ers; weighers. 

As to Classes B and C there is room for discussion. 
Hucksters and peddlers, for instance, in Class B, might 
seem to be almost purely devoted to bargaining, but they 
do accomplish some transportation. They are balanced by 
the auctioneers in Class A. The lawyers are the most 
difficult to classify fairly. Those devoted to civil law, 
which includes the ablest among them, come under the 
nature of Barter-cost in their activities; but it was unde- 
sirable to place them in Class C because it is reserved for 
occupations " productive, but contributive to compe- 
tition," and the practice of civil law cannot be considered 
as in any way productive of value. Had it not been that 
criminal law must be included as one of the necessary 
productive occupations, the lawyers would have been 



I 



THE GROWTH OF DISSIPATION 245 

placed in Class A. As it is, Class B puts their efforts in 
the right direction and to the right amount, although it 
is only in a technical sense that they " negotiate." 

Consideration of Class C brings out how intimately 
the cost of bargaining has permeated every fiber of our 
industrial body. It is only upon careful consideration 
that any connection between some of the occupations of 
Class C and competition can be seen. Draymen and 
teamsters, for instance, are occupied almost wholly with 
transportation; but the bulk of it is transportation not 
needed to get the goods from maker to consumer, but 
rendered necessary only by the artificial multiplication of 
owners and warehouses intermediary between production 
and consumption and the interminable duplication of 
effort which is one of the characteristic incidentals of the 
profit-seeking system. 

Nor is this the worst of It. In railroad transportation, 
for instance, the economies are refined until the cost is 
measured in some fraction of a cent per ton-mile. But 
when the railroad's work is done the goods are turned 
over to a system of transportation, by teaming over cob- 
ble-stones, so crude in its characteristics that the cost is 
measurable only in large fractions of a dollar per ton- 
mile. It often cost more to get goods from the freight- 
depot to the warehouse than It does to carry them half- 
way across the continent. The explanation Is that the 
railroads are each organized and operated upon a 
thoroughly cooperative basis, each department and each 
employee being induced and required to direct his efforts 
In harmony with the others toward a single object. He 
Is encouraged in every possible way to enter into emula- 
tion with his fellows, but is permitted to give no atten- 
tion whatever to competition against them to his own 
private profit. To illustrate, the spectacle of the motive 



246 THE COST OF COMPETITION 

power and the general ticket agency departments of a 
railroad organized competitively as separate properties, 
each trying to get every cent possible out of the other, or 
of each machinist in the locomotive-shops trying to secure 
control of its tool-room in order to tax every other 
machinist as much as possible for the privilege of its use, 
would be not one whit more absurd than is the present 
inharmonious strife in the unorganized teaming business, 
or between the many departments of the nation's general 
industrial organization for the purpose of feeding and 
clothing itself: as we shall plainly see it to be some few 
years hence. 

Between the freight-depot and the warehouse Is full 
instance of this planlessness and strife. The streets are 
partly owned by the city, partly by street-railway com- 
panies and partly by gas and electric corporations — for 
the nominally complete ownership of the streets by the 
city becomes, and must ever become, an utter farce so 
long as the others are permitted to use them for profit- 
making purposes. The teams are owned by individual 
owners or small corporations. Each pulls against the 
other. Each strives to get as much money and to give as 
little service as he may. The result is cobble-stones and 
confusion. Why do not the writers upon railroad 
economics consider the seven mills per ton-mile as well 
enough to leave alone, while they turn their light upon 
the enormous wastes of competition visible in urban 
transportation ? 

Moreover, even of the more efficient railroad trans- 
portation a very large proportion is occasioned wholly by 
barter. The great bulk of winter passenger-travel and a 
fair fraction of all freight traffic Is occasioned by barter: 
the first In commercial traveling, of officials as well 
as salesmen; the second by the dismemberment of each 



THE GROWTH OF DISSIPATION 247 

task of production between so many separate lo- 
calities.^ 

The same is true of almost all of our phenomenal 
growth of trolley-traffic; while the summer riding on 
suburban lines is almost wholly for pleasure, all the rest of 
it is occasioned almost solely by barter. The same is true 
of the telegraph and telephone. In fact, it is only when 
this entire proposition as to barter is fairly well in mind 
that a realization may be had of how completely its 
recent growth has been permitted by and subsists upon 
modern improvement and extension of the facilities for 
communication and transportation. Indeed, the bulk of 
all of these occupations might have been assigned to Class 
C without arousing any very valid question as to accuracy. 
To be conservative, however, the steam and street rail- 
roads have been assigned to Class D, only the telegraph 
and telephone service being assigned to Class C to counter- 
balance ; but the writer reserves doubts as to v/hether this 
properly reveals the extent of competitive cost. 

As to electroplaters, engravers and printers, the con- 
fusion and inefficiency within their ranks is not so great 
as in transportation, but the proportion of wasted result 
of their effort is greater. A glance over the field is suffi- 
cient. In newspapers, trade-journals and magazines the 
proportion of space and cost given over to advertising, 
as compared with that devoted to reading-matter, is 
enormous, and it is steadily on the increase. This one 
topic, advertising, would make a splendid thesis upon the 
growth of the cost of competition. In book-making, the 

3 The subdivision of the task in specialization upon its several parts is 
one thing, an invaluable thing; the assigning of each of these subdivisions 
to unnecessarily competing corporations, with their factories unnecessarily 
scattered over a score of cities in a dozen States, when one unified organi- 
zation and premises might suffice for all, is quite another and an immeasur- 
ably wasteful thing. 



248 THE COST OF COMPETITION 

trade-catalogues and circulars stand in tremendously signifi- 
cant proportion over against the books proper. Not only 
is the mass of trade-publication appearing each year 
almost beyond estimate, but its quality and cost is of the 
highest. Practically all of the finest work done in lithog- 
raphy and photogravure is devoted to advertising pur- 
poses. In addition to these items of space-advertising and 
trade-catalogues comes the entire array of leaflets, cal- 
endars, posters, street-car cards, circular letters, etc. 
The mails groan with the weight of costly advertising- 
matter distributed daily, the great bulk of which finds its 
way promptly to the waste-basket while the remaining 
tithe accomplishes a result of no value whatever to the 
community: the attraction of A's purchasing-power into 
C's pocket whereas otherwise it would have gone into B's. 
A few years ago this was all done with printed circulars, 
calling for one cent postage. To-day these are largely 
replaced by sealed letters, requiring twice the postage and 
five times the cost of mailing. 

To the suggestion that advertising Is necessary in order 
to keep the consumer apprised as to what is purchasable 
reply has already been made (see page 172). Bulletins, 
such as the telegraphic market-reports or the printed con- 
sular reports, written upon the. same plan and in the same 
impartial spirit as our book-reviews and scientific bul- 
letins, might supply to the public the most complete infor- 
mation as to every novelty of value currently arising in 
the world of production, and yet be of not one-fiftieth of 
the volume of our current advertising-matter or of one 
thousandth of its cost. In comparison with such methods 
as these, how much helpful information as to the worth 
or the unworth of goods purchasable does one get from 
mailed circulars containing no accurate or reliable infor- 
mation whatever as to the goods advocated, reiterated 



THE GROWTH OF DISSIPATION 249 

ad nauseam, from the highly colored posters which 
desecrate our public streets, from ubiquitous and frantic 
adjurations to " Don't be a goose ! " or from the most 
costly announcements of: " W whiskey. That's all ! " 

Moreover, there are many costly forms of advertising 
which fail to be properly revealed in the classification 
under discussion. The greater portion of down-town 
illumination, the multiplicity of electric signs, on side- 
walk and housetop, some of them exceedingly elaborate 
and costly; the desecration of cliff and field with thou- 
sands of hideous emblazonments; the sandwich-man and 
the fake orientals who perambulate the streets; the 
inharmonious confusion of street-signs, from the impu- 
dent intrusion, in letters several feet high, of the names 
of men you care nothing about and whom you wish never 
to meet, to that architectural crime, the "yellow front "; 
the voluminous use of the mails for the transmission of 
undesired third-class matter, now being rapidly replaced by 
still more costly appeals by first-class mail; the enormous 
distribution of unasked, unused and wasted samples, cal- 
endars, memorandum-books, etc., etc. — all of these to- 
gether involve a huge current outlay of labor and raw 
material, all inevitably destined to dissipation and irretriev- 
able loss, the cost of which appears not at all in the classifi- 
cation of occupations adopted. Wherefore the writer 
Insists that Its revelation of the absolute amount of com- 
petition now prevalent in the country Is safely, even 
deceitfully, conservative.* 

So with the rest of the list. Packers and shippers, for 

4 In another and independent estimate of the amount of competition the 
results attained, including all sorts of barter-cost, netted nearly one-third 
higher than the figures about to be presented; and this expresses the 
writer's personal opinion as to the real truth in the case. But as the method 
then used could not be applied to the censuses of the earlier decades, it is 
of no use in illustrating the growth of the institution. Moreover, if the 



250 THE COST OF COMPETITION 

Instance, devote the bulk of their effort to conducting the 
artificially multiplied shipments from one profit-maker 
to another, or to the needless ornamentation of packages 
to attract purchase. 

But our object Is not so much to obtain an absolute 
measure of the amount of competition present as It is to 
gain an Idea as to its comparative growth. Whether any 
of these items of classification be justified as accurate or not, 
the essential points are that the general sweep of distinc- 
tion Is between Barter and Production, that unquestion- 
ably the bulk of the two are separated by the classification 
chosen, and that it is applied impartially to the several 
censuses. If the proportion of competitive effort within 
the community has increased, It will show plainly In the 
earlier classes of the list, and in the comparative decrease 
of Class D. The removal of any few Items from one 
class to another would have a scarcely appreciable effect 
upon the resultant exhibit. This test, indeed, the author 
has applied repeatedly. 

The Gravitation of Economic Population. Upon 
this fair basis, therefore, of obtaining a comparison 
between the several decades which shall be accurate in an 
absolute sense only so far as may be, the four classes are 
assigned to Competition or Production, respectively, upon 
the following plan: 

Class A. — ^AU competition; 

Class B. — ^Three-quarters competition, one-quarter 
production; 

Class C. — ^Three-quarters to (aiding and abetting) 
competition, one-quarter to production; 

proportion of our total industrial organization absorbed by barter be no 
more than the figures following, or even considerably less, quite all that 
is necessary has been proven to show the urgency of the need for its 
abolition. 



THE GROWTH OF DISSIPATION 251 

Class D.— All production. 

As the first result of these assumptions is given the fol- 
lowing table of percentages of total industrial population 
devoted to competition over the fifty years: 

1850 i860 1870 1880 i8'90 1900 
5.7 6.2 7.6 7.5 10. o II .8 

The dissipators are yet comparatively few in number, 
but their proportion to the whole has more than doubled 
in the fifty years. The mathematical probability is that 
in 1906 they will number 14 per cent, of the industrial 
population, should no change have taken place meanwhile 
in law or public policy. 

The above applies to all population contributive to 
barter. The figures for the growth of the population 
devoted purely to barter alone, or Class A, are : 

1850 i860 1870 1880 1890 1900 
0.24 0.37 0.44 0.62 1.46 1.68 

Class A, in other words, had grown, in 1900, to just 
seven times its proportions in 1850. By 19 10 It will 
probably have grown to nearer ttn times Its porportlons 
of 1850. 

Fig. II shows separately the comparative growth of 
each of the four classes In percentage of total popula- 
tion, taking that for 1850 as unity In each case respec- 
tively. 

Class D Is the most nearly constant, as compared with 
the others, but reveals a steady decline to less than nine- 
tenths, in 1900, of Its original proportions In 1850. Class 
B is nearly as constant, but shows a steady increase to 
nearly 70 per cent, above its original proportions. Class 



^52 



THE COST OF COMPETITION 



C, the esquire of Class A, although in the nature of its 
efforts it largely parallels Class D, experiences a still more 



6- 



k- 



3? 



e- 



i- 



Q^ 




iS6o iS6o :iS'ro iS8o tSoo iooo 



Fig. II. The Comparative Growth of the Four Classes: 

Population 

phenomenal growth, to nearly three times its original pro- ii 
portions. That is, if the progress of the past half-century 



THE GROWTH OF DISSIPATION 253 

had been merely that due to the growth in population, 
science and invention, Classes C and D should have 
experienced growth equally. The marked advance of 
Class C while D actually goes backward can be explained 
only by the fact that C is contributive to a vastly growing 
barter which in turn inevitably restricts the opportunity 
for the subsistence of Class D. 

Finally, Class A, the one of all four classes which 
should reveal unquestionably any growth which the institu- 
tion of barter may have experienced, shows a growth to 
nearly seven times its original size.^ 

The Economic Aristocracy of Competitive 
Effort. These curves, however, measure only per- 
centages of population. They take no account of the fact 
that nearly all of the best ability of the country gravitates 
into the ranks of competition, while the masses still 
addicted to production average a much lower grade of 
individual productivity. In order to bring out this point 
the following diagrams are arranged to display the aggre- 
gate economic energy of the several classes, considering 
the comparative productive efficiency of their individual 
members, as revealed by their comparative industrial 
valuation. In the case of the most important of these 
diagrams, Fig. 12, to the competitive cost thus previously 
revealed, which included only net profits and barter-cost, 
was added the economic energy consumed by Capitalism, 

5 The progress of this class since 1900, as estimated, is shown by the 
dotted extension of the curve. It is drawn in at the angle which has char- 
acterized the average rate of growth since 1850. It will be obvious, how- 
ever, to anyone who has observed the phenomenal acceleration of all purely 
commercial enterprises since the Spanish war of 1898, that the rate of 
growth during the last five years must have exceeded anything previously 
recorded during the past half-century. For instance, the Audit Company, 
of New York, in its "Trust-companies of the United States," reports that 
of all the trust-companies in existence on June 30, 1903, forty-three per 
cent, had been organized since January i, 1901. 



254 



THE COST OF COMPETITION 



including rent, as well as interest or dividends upon " cash, 
loans and securities." ^ 

In Fig. 12 the total height of the diagram measures, 

i8So i860 iS^o i88o i8^o tgoo ipio 



001 

eo\ 
70 
60 
60 

Uo 
Qo 
80 
iOV 



DISSIPATION. 



o 



production: 



•*^ 



90 
70 

So 
60 

Jf-O 

So 

zo 

iO 



-u o 



Fig. 12. The Growth of Dissipation and the Inefficiency of the 
National Economic Organism 

upon a different scale for each decade, the total industrial 
activity then prevailing, as revealed by the total produc- 

6 The method of arriving at an estimate of this current volume of weahh 
will not be discussed here. Several methods are available, but each is in 
the nature of an estimate and opens space for endless discussion as to accu- 
racy. The fact that we have not based our line of argument upon statis- 
tical proof at all, but reserved statistics purely for the purposes of illustra- 
tion, and for that of comparative quantitative growth only, justifies this 
omission. It might be said in passing, however, that the two quite inde- 
pendent methods relied upon for these estimates checked each other within 
three per cent. For the purposes of a comparative display of the several 
decades this is amply accurate. 



THE GROWTH OF DISSIPATION 255 

tlon of wealth. It also measures at each decade the total 
Value produced. The curves of Fig. 12 show, by the ordi- 
nates of the clear area, the percentages of the total wealth 
currently available for distribution throughout the entire 
nation which have been allotted to and expended by the 
Producers. The ordlnates of the darker portion above 
the clear area show the percentages drawn and consumed, 
hoarded or wasted by the Bargainers. The area of solid 
black shows the portions of this last which were absorbed 
by the individuals unquestionably devoted to economic 
'dissipation, viz.: Class A of the occupations, with the 
addition of all capitalism. The shaded area shows the 
portions absorbed In Barter-cost, as revealed by the frac- 
tions of Classes B and C, which have been considered as 
consisting of that sort of activity. The wealth actually 
lost to the community by dissipation is therefore measured 
by the total darkened area. 

The barter-cost Is separated from the pure barter and 
capitalism for two reasons, viz.: 

(i) As additional aid in understanding the situation; 

(2) Because all of the questions which may arise as to 
the justice or accuracy of the classification of some of the 
occupations as competitive, rather than productive, must 
be confined to Classes B and C. It cannot possibly be 
questioned that Class A is practically entirely competitive, 
on the one hand, and that it fails to reveal all of the com- 
petitive effort extant in the country, on the other. It Is 
therefore absolutely certain that the solid black area 
reveals less than the truth as to Economic Dissipation. It 
Is the writer's firm opinion that even the total dark area, 
Including that merely shaded, Is also less than the truth. 
Granting the fullest benefit of the doubt to any such ques- 
tions, therefore, the true line demarking Production from 
Dissipation must pass somewhere within the shaded area. 



256 THE COST OF COMPETITION 

The showing of the diagram, that the barter-cost of the 
nation has been sensibly constant for fifty years, cannot be 
true, however. It is an all too obvious historical fact that 
it has increased. The explanation of the inconsistency of 
the statistics with the facts is simple, however. The show- 
ing of the diagram is correct; but it measures only the 
proportionate income of certain arbitrary divisions of 
society which during recent years have been so occupied as 
to warrant their classification as competitive to a certain 
degree. But fifty years ago they were not competitive to 
anything like that degree. Their efforts and their pro- 
duct were the same in nature as now, but the destination 
of that product was totally different. Then it was largely 
consumed by the people, in the support of life; now it is 
consumed wholly by the bargainers, to the destruction of 
life. Indeed, it would almost be justifiable to state that 
the portion of this shaded area which is properly charge- 
able to competitive effort were a direct proportion of the 
solid black area of dissipation. But whether this be so or 
not signifies little, for the error is in the earlier, not in the 
later, years. It is altogether likely that the barter-cost 
of 1850 was much less than the proportion displayed in 
the diagram. There is little likelihood that that of 1900 
is anything else than greater than what is shown there. 

Fig. 12 reveals these proportions merely as percentages 
of our entire industrial activity. It will provide a more, 
realizing sense of what has been actually taking place dur- 
ing these six decades if the quantities of production and] 
dissipation be shown in their absolute dimensions. Unfor- 
tunately, this is impossible. Owing to all of our records] 
being in dollars of Valuation we have no accurate knowl- 
edge of the growth of Value-production. It may be 
assumed, however, that this productivity per capita has 
increased by ten per cent, between 1850 and 1900, which 



THE GROWTH OF DISSIPATION 



257 



agrees well with the general appearance of things; that 
is to say, the average enjoyment of life and growth per 
individual has increased at that rate. There are many 




iS6o i860 id^o iSSo iS^o i^oo ipiO 



Fig. 12a. The Advance of Invention, Science and Art, and 
What we get out of it. 

who doubt that it has increased at all. If the truth be a 
higher figure than ten per cent., however, the showing of 
the diagram would be even more striking. Drawing the 
line PP, of Fig. 1 2a, therefore, at the angle with the hori- 



258 THE COST OF COMPETITION 

zontal measuring this rate, the recorded proportions of 
barter-cost and total dissipation appear as the dark areas 
above PP. They show the rapidly increasing burden 
under which each producer maintains his subsistence and 
the futility of scientific progress in the face of barter. 

It is a fact already stated, and soon to be referred to 
again in connection with the ethical aspect of this question, 
that this parasitical growth of competition subsists chiefly 
upon the natural growth of the community in potentiality 
for production. It is a familiar fact that, in spite of the 
recent phenomenal growth of the labor-saving arts, the 
ability of the individual to subsist in ease has grown very 
slowly, if at all. For instance, If we gauge the growth of 
material productivity by the tonnage of steel-output, or of 
railroad-traffic, it does not appear that the comfort of the 
individual has increased at a similar rate. It appears, 
indeed, that the individual has been comfortable only when 
the total material productivity has grown very rapidly — 
so rapidly that barter was unable, for the moment, to 
expand quickly enough to catch up with It and absorb it 
all. Thus, the volume of freight-traffic has grown re- 
cently as follows: 1890-92, 8% per annum; 1892-97, 
1.6%; 1897-1900, 16%; 1900-04, 6%. During these 
years the population grew steadily at about 2% per 
annum. In other words, when the technical arts grew fast 
enough to expand our material productivity some three or 
four times as fast as the population expanded, we enjoyed 
stationary comfort. When they grew only so fast as the 
population we had hard times. It Is only when they grow, 
temporarily, some eight times as fast that we enjoy pros- 
perity, such as it is. Fig 1 2a explains how this happens. 

Class-Evolution Since 1850. Should there still be 
the slightest doubt left in anyone's mind that the distinc- 



THE GROWTH OF DISSIPATION 



259 



tion framed into the definitions of the words Production 
and Competition measures a real and a most marked 
tendency In our recent and present economic development, 
that doubt ought to be finally settled by the showing of 
Fig. 13. That diagram displays the proportion existing 
between Classes A and D throughout the half-century, 




iSSO 



Fig. 13. The Growth of Activity of Class A Proportionately to 

that of Class D 

Classes B and C being rejected entirely from considera- 
tion, for the moment, both as being comparatively doubt- 
ful in characteristics and as being of minor importance (as 
shown by Fig 12). It will be noticed that whereas in 
1850 the certain dissipation shown by Class A amounted 
to only 17 per cent., or practically one-sixth of the cer- 
tainly productive effort shown by Class D, in 1900 it had 



26o 



THE COST OF COMPETITION 




iSSo I860 ISjo iSSo tSno ipoo 

Fig. 14. The Comparative 
Growth of the Four 
Classes : Income 



grown to be 183 per cent, of it, 
or nearly eleven times as great in 
comparison By 1905 it prom- 
ises to have reached a relative 
proportion thirteen times as great 
as what it possessed in 1850. 

Comparative Evolution of 
Purchasing-Power. Fig. 14 
shows the comparative evolution 
of the aggregate income for each , 
of the four classes separately, the 
original proportions of each in 
1850 being taken as the basic unit 
of comparison. While in all of 
them Is visible the depressing ef- 
fect of the Civil War In the 
1 860-1 870 decade, yet each 
evinces a characteristic tendency 
which Is followed with practical 
consistency throughout the entire 
half-century. Classes B and C 
receive the most nearly constant 
proportion of the national In- 
come, as might be expected from 
their comparatively neutral na- 
tures; yet their leaning toward 
competition preponderates over 
their portion of productive effort, 
as Is shown. In connection with 
the facts presented elsewhere, by 
their quite visible tendency to In- 
crease. By 1900 the proportion 
going to Class B had become 
some 9 per cent, greater than 



THE GROWTH OF DISSIPATION 261 

what it was in 1850; that of Class C had increased by 27 
per cent. Class D, on the other hand, shows not a steady, 
but a regularly increasing, decrease in its proportion of the 
aggregate income. During the first thirty years after 
1850, to choose a period long enough to reach well to 
either side of the Civil War, its loss averaged 9.6 per cent. 
per decade; during the twenty years next following, 
extending down to 1900, its loss was at the rate of 11.6 
per cent, per decade. By the end of the century it had 
fallen to only 48 per cent, of what it was in 1850. 

When the number of people affected by this loss on the 
part of Class D is considered, its significance as to our 
national welfare and happiness becomes enormous; 
although the diagram, in order to include the record of 
Class A, had to be arranged upon a scale which lends it 
little emphasis. The truth comes out, however, both as 
to the enormity and the explanation of the loss, when 
attention is turned to the phenomenal growth of the pro- 
portion of national income allotted to Class A. By 1870 
it had grown to over three times its proportions for the 
year 1850. During the thirty years intervening between 
1870 and 1900 it grew at the average rate of two hundred 
and fifty-four per cent, per decade, attaining, by 1900, a 
size nearly eleven times as great as what it claimed as its 
own in 1850! ^ 

'^ One interesting point is brought out by the fluctuations in the curves 
at the time of the Civil War. Fig. 12 reveals a marked increase in the 
proportion of economic dissipation in the country at that time. Fig. 14, 
however, shows a smaller growth of Class A for that decade than for any 
other. The explanation is that that period witnessed an enormous expan- 
sion of capitalism, due to war loans both public and private. The absorp- 
tion of the country's adult males, and especially of its ablest men, into the 
ranks of the army, however, placed a marked damper upon all commercial 
development, promotion and negotiation. It is altogether probable that all 
of the growth of Class A visible in Fig. 14 for that decade took place in 
its latter half, the first half very possibly showing negative progress. 



262 THE COST OF COMPETITION 

The Irrelevancy of Technical and Scientific 
Progress. It is ever to be remembered, In considering 
these diagrams, that all effect due to the growth of either 
population or the arts has been eliminated. These 
diagrams exhibit pro,portions only. That shown by one 
class can increase only by the corresponding decrease of 
that of some other class.^ See also page 257. 

Industrial Inefficiency. The most striking revela- 
tion in Fig. 12, to the practical man, is not one con- 
cerning individual Injustice, oppression of the poor or 
aught of that sort. It is the astounding inefficiency of 
organization of the entire Industrial and commercial body, 
viewed as a unit-device existing for the purpose of supply- 
ing the Consumer with goods. In this display can arise 
no question whatever as to individual efficiency or ineffi- 
ciency, by the shifting of the blame for it upon the 
shoulders of the laborers. Their productivity has undoubt- 
edly markedly increased during the half-century, by 
the general rise in standards of public education; yet the 
diagram shows a steadily and rapidly decreasing propor- 
tion of the aggregate production of wealth returning to 
them. Nor can there arise any question based upon the 
recent growth in the arts and sciences, In modern 
machines and methods. They certainly have also Increased 
In productivity, with even less doubt. But both of these 
factors are eliminated by the adoption of percentages of 

8 It is proper to remind the reader that these diagrams are based not 
only upon the statistics of population to be found in the census-reports, but 
also upon their modification by the varying average incomes for different 
classes and times. There is no question more the subject of vehement dis- 
cussion and difference of opinion than this last. Therefore the author 
deems it best to say merely that he has used figures which he believes to 
be correct in their representation of actual conditions. The important point 
to be noted is that the widest differences of opinion upon this point would 
not materially alter the conclusions to be drawn from the diagrams. 



THE GROWTH OF DISSIPATION 263 

total. actual production as the thing exhibited. The aggre- 
gate production at each date, whether it be greater or less 
than at earlier periods, has been considered as the unit- 
base upon which to build all comparisons and has been 
called " 100 " upon the vertical scale of w^ealth-distributed 
In Fig. 12. Looking at the total industrial and commercial 
organization as an apparatus, not for the production, but 
for the distribution of wealth, after the latter has been 
completely produced,^ — at the efficiency of Production and 
Natural Exchange when Barter Is superimposed, as com- 
pared with Production and Natural Exchange alone, — It 
appears that In 1850 that efficiency was practically 70 per 
cent., that by 1880 It had fallen to 50 per cent, and that 
In 1900 It had gotten down as low as 34 per cent! The 
most remarkable thing about the situation Is that the 
machine has not ceased operations altogether, absolutely 
stalled — so labored, so noisy, so full of cross-purposes. 
Interferences, friction and Impact, developing heat and 
wear at every contact, is Its lumbering operation. Mathe- 
matical probabilities permit the estimate that by the time 
these pages reach the reader ( 1905) Its efficiency will have 
fallen below 30 per cent.; while by 19 10, unless some 
fundamental change be made In public policy and law In 
the meantime, this figure will have reached the Impressive 
point of 26 per cent. — ^wlth the development of what 
degree of heat of controversy and conflict, from the 74 
per cent, of national energy perverted and wasted In the 

^ It must be remembered here that, whereas in current economic dis- 
cussion the term " distribution " is commonly used to refer to the trans- 
portation or to the retailing of material commodities between the factory 
and the consumer, in the present work this task is included as a part of 
the work of Production. The term " distribution " is here reserved to 
cover the apportionment of the purchasing-power, the " dividing-up " of 
the spoils, resultant from the nation's current production (including trans- 
portation) of Value. 



264 THE COST OF COMPETITION 

conflict called competition, and with what further insta- 
bility of social life, no man may dare to predict. 

A great deal Is being said In the current periodical press, 
chiefly by the hard-headed, self-made, " practical " man, 
about the Inefficiency of the lower classes as the cause of 
all poverty. The Industrial organization, just analyzed as 
to Its efficiency, lies wholly In the control and under the 
direction of the topmost classes (scaled In a commercial 
sense), In the hands of the very class of men who make 
these unjust and superficial statements. Where is the man 
among them who would tolerate in his own factory or 
office an efficiency of organization as low as 70 per cent., 
a loss of 30 per cent, due purely to Its members being per- 
mitted to work at cross-purposes and with duplicated 
effort? Who among them would permit that efficiency 
to fall steadily with the passing years without doing some- 
thing adequate to prevent It? Who among them would 
for an Instant deny that he ought to be summarily dis- 
missed from authority, in disgrace, if he let it drop from 
70 per cent, to 60, from 60 to 50, from 50 to 40, and let 
it finally touch 30 in the opening years of this twentieth 
century of promise, before he gathered himself together 
to the realization that things were going radically wrong 
and that decisive action in the direction of fundamental 
reform were absolutely necessary? 

Is Nicholas Romanoff alone in his bourbonism? Is 
he so peculiarly Incompetent? Have these captains of 
industry and arbiters of human destiny no other remedy 
to offer for such egregious maladministration than a little 
lower tariff," a variation in the currency, a few more 
libraries, a little more science, an additional park or play- 

10 Because this argument aims at the clear understanding of fundamentals, 
as a first requisite for understanding details, the discussion of such an 
important subject as the tariflf is relegated to a brief footnote such as this. 
The occasion cannot be passed, however, without at least the bare state- 



THE GROWTH OF DISSIPATION 265 

ground? These are all good, but all except the first have 
grown steadily while this inefficiency has also grown. Are 
these leaders of men so incapable as not to see the micro- 
scopic disproportion of these alleged remedies to the social 
disease for which they are prescribed, their gross irrele- 
vancy to the problem presented by a national efficiency, 
not of average units, but purely of organization of those 
units, of a bare thirty-odd per cent. ? Are they so super- 
ficial as not to see that the lack of playgrounds and schools 
and libraries and free trade are an incidental result, and 
in no sense a precedent cause, of this inefficiency? The 
organization which is so inefficient, the Industrial and com- 
mercial organization which makes all wealth and all 
poverty, is wholly within their hands; the parks and 
schools and libraries and the tariff are in the people's. It 
is the commercial magnates who enjoy all the privileges of 
industrial control; upon them lies the fullest responsibility 
for its net results. Are they stupid and inefficient, these 

ment that of all of the instruments employed by the batterers for both 
hoodwinking the people and at the same time forcing from their pockets a 
larger profit than would otherwise be possible, no single one can be men- 
tioned which has been operated upon so gigantic and systematic a scale as 
has the tariff. It cannot be considered possible that the enormous growth 
of profit-making enterprise shown by these diagrams would have been 
feasible without its aid. If the " encouragement of infant industries " may 
be taken to mean the inflation of profit-making powers, then the tariff has 
been phenomenally successful ?n accomplishing just what it set out to 
accomplish. But it cannot be supposed that the people have understood 
the proposition in those terms. 

As these pages are being written arises one of the most striking bits of 
evidence of the complete control which profit-seeking has obtained in the 
most civilized countries, and of the insistency of its growth: in the British 
agitation in favor of a tariff. There the profit-seekers have found that 
they cannot successfully compete, without its aid, with those countries 
which possess it. All talk of its consolidating the empire is a mere dress- 
parade argument to cover this. But the success which this implies that 
they will gain, from its acquisition, is not the success of the people, but the 
" prosperity " of the money-makers, evidenced chiefly by the discontented 
strikes of the laborers and by high prices to the consumer. 



266 THE COST OF COMPETITION 

barons of commerce, that matters get into such shape in 
their hands, and puerile, that they offer such childish 
remedies ? Or are they merely unpatriotic and selfish, not 
really interested in that task of supplying the people 
cheaply which they so noisily claim as their own divine 
right, when advantage is to be gained thereby — going to 
the greatest trouble to attain those " understandings " 
whereby the market is controlled and prices enhanced, but 
offering never a conference aimed at the elimination of 
all profit and the supply of commodities at the cost of 
production ? 

The country is waiting for an answer; but it will not 
wait long nor patiently. The Consumer pays all the bills. 
He buys the raw material, hires the labor, rents the 
ground, interests the capitalist and pays the cost of barter 
and the net profit — through his agent, the manufactur- 
ing superintendent or manager. The employer, the 
capitalist, the bargainer and the laborer are alike his 
stewards. From them all he is soon to exact an account. 

For the consumer, as an average man, sees plainly that 
something is wrong, that life is not bringing to him what it 
ought; that it is bringing to a few others, if not more than 
it ought, at least very much more than it does to his 
equally deserving self and family. Though he cannot 
yet see how it comes about, it will not be long before he 
does. The situation is complex, the robber's tracks are 
skillfully covered and are easily lost in the crowd ; but only 
for a time will their evasions suffice. For the mqment 
only is the conclusion commonly rife that the country is 
going to the demnition bow-wows and that naught can be 
done to help it. For it is too plain that it is not, that it 
is merely gravitating into the hands of the demnition bar- 
gainers. Like a black tornado-cloud out of a clear sky, 
filling the whole visible horizon, their burden of economic 



THE GROWTH OF DISSIPATION 267 

dissipation of a nation's wealth Is sweeping over the 
doomed land. There must be few who cannot see It. Its 
dire weight of whirlwind disgregation, destruction and 
death bears down upon our fair, free civilization with a 
menace Immediate and awful. 

Fortunately, though, In Its track are no dark cyclone- 
cellars for men to flee to, calling witness to the wrath of 
God. From this gigantic penalty for our Ignorance and 
selfishness, nationally organized, there Is no escape and no 
excuse. Face to face with It must the nation stand, as a 
man, acknowledging the ogre as the child of its own past 
folly, fighting now Its own unnatural offspring to a finish, 
for life or death. For from the hands of the bargainers 
we must wrest back our own, our heritage of freedom, of 
initiative and of full enjoyment of what prosperity we 
ourselves produce, or we must die. As a rope of sand, as 
a mere mass of uncohering particles, formless, forceless 
and without Issue, we may continue to exist without It. 
But as a nation, a unit-people, possessing a concrete past, 
an origin of which we are not ashamed, a present we dare 
to call our peculiar own and a future destiny the mold 
for which we even now carve fearlessly — as all such with- 
out it we must die, as surely as we must have died had we 
faltered and failed In 1863. 

Injustice to the Individual. But the side of the situa- 
tion which rises higher than mere questions of economic 
efficiency, Into those of public justice and Individual 
liberty, remains yet to be diagrammatically displayed. 
Since the proportion, both of enforcedly unemployed and 
of those accepting the starvation-wage, to the total popula- 
tion of their layer Is directly dependent upon the propor- 
tion of competitive to productive effort, Fig. 15 has been 
arranged to display this last. (See also pages 168 and 
169.) In it the curve A A gives the proportion between 



268 



THE COST OF COMPETITION 



the wealth going to Class A and to capitalism, on the one 
hand, and to the entire Productive Division, including the 
fractions of Classes B and C, on the other. It is to be 



3.0 n 



1.0- 



0.5- 




lS6o i860 iS'^o i88o i8po i^oo 

Fig. 15. The Comparative Growth of Productive and Competitive 
Activities: Aggregate and Individual 

read upon the left-hand scale. It is the same curve as A A 
of Fig. 14, but with capitalism added, showing that the 
latter has not grown nearly so rapidly as has pure barter; 



THE GROWTH OF DISSIPATION 269 

the earnings of capitalism, however, fall into practically the 
same hands which receive those coming from pure barter. 

The curve BB displays the growth of average individual 
income of the producers, referred to the right-hand ver- 
tical scale read as hundreds of dollars per annum. This 
curve is not to be taken as displaying actual Incomes; It is 
a species of coefficient, proportional to them and not very 
far from coincidence with them. 

The curve CC shows the growth of individual Incomes 
for the bargainer-class by similar coefficients, and should 
be referred to the right-hand scale read in thousands of 
dollars per annum. It applies to Class A and three- 
quarters of Class B taken together, all capitalism being 
assigned to them also. 

The curve DD shows the growth of proportion between 
these Individual incomes and those received by the indi- 
vidual producers. It Is to be referred to the right-hand 
scale, read as units. 

The curve BB shows the income of the producer to be 
steadily, though slowly, increasing.* This Is undoubtedly 
true, when measured in dollars and when the unemployed 
are left out of consideration. Whether it has grown or 
not when the purchasing-power of these dollars is con- 
sidered, or when the unemployed (many of them being In 
our asylums and prisons) are also included, as necessarily 
supported at the expense of production, Is a question to 
which no definite answer can be given here.^^ 

The curve AA gives a measure of the growth of our 

11 It is perhaps unnecessary to point out that although the taxes which 
support our charitable institutions are nominally paid chiefly by the busi- 
ness-houses, yet in fact the entire sum is paid by the producer and con- 
sumer, between them. High taxes, always included as one of the " costs 
of doing business," constitute one of the commonest excuses for the necessity 
for low wages and high prices. Every cent paid out by the bargainers in 
the form of taxes is charged up against and taken out of the public in one 
of these two ways. 



270 THE COST OF COMPETITION 

national or collective loss of morals Involved in the unjust 
distribution of wealth; for it will be developed later that 
income awarded either to idleness or to destructive, dis- 
sipatlve effort, at the expense of productive effort, is inevi- 
tably converted into a destruction of either public or pri- 
vate morals. While, as ever In social ethics, the penalty 
for misconduct does not necessarily, nor even usually, fall 
upon the individual committing the fault, it falls just as 
surely somewhere within the body politic. 

The curve DD gives a measure of the individual Injus- 
tice done in this same way. In 1850 the average Individual 
income allotted to these selected classes of bargainers was 
eleven times that given to the producer; in 1900 it had 
grown to be thirty times as great.^^ 

Enforced Idleness. Indirect evidence In Incidental 
support of the general position which has been outlined In 
the preceding pages is found wherever statistics throw any 



A 
B 
C 

Fig. 16. Comparative Percentage of Unemployed in the Four 

Classes. 

light whatever upon the distinction between productive 
and competitive effort, so neglected In existing collections 
of data. The percentage of unemployed In the several 
classes in 1890 was: A, 4.4; B, 4.4; C, 6.3; D, 17.6. 
This Is shown graphically in Fig. 16. The unemployed 
are present in all four classes, showing the presence 

12 These figures, it must be remembered, are based upon only a part of the 
total population: the industrial body, consisting very largely of adult miales. 



THE GROWTH OF DISSIPATION 



271 



of horizontal competition within each. They are most 
numerous in Classes C.and D, showing the presence of 
vertical competition between the several classes. The same 
thing is visible in Fig. 17. 



Merchants : 

Bankers, manufacturers 

and officials of corpora- 
tions : 

Professional : 

Domestic : 

Laborers : 



Fig. 17. Comparative Percentages of Unemployed in Several 

Avocations 

Merchants : 

Bankers, manufacturers 

and officials of corpora- 
tions: 

Professional (teachers 
shown separately) : 

Domestics and laborers: 

Fig. 18. Comparative Percentages of Unemployed In Several 
Avocations of Negro Population 

A comparison of Figs. 17 and 18 is interesting. In 
the first place, if unemployment were due to a lack of 
either enterprise or efficiency on the part of the indl- 
dividual, the negro race should certainly show a much 
higher percentage of unemployed than the whites. But 
it does not. Its average percentage, for all occupations, 
is about equal to that in the professional class among the 
whites, the one class embodying the highest standards of 
education and devotion to duty found within the nation. 
The explanation is that both the negro fieldhand and the 



272 THE COST OF COMPETITION 

professional white belong, economically speaking, together 
in the lowest class, that of the producers, which suffers most 
from the vertical competition of the bargainers above them. 
In the second place, the difference in lack of employment 
between the several sorts of occupation is much less 
among the negroes than among the whites. This may 
be partly due to the negro's love for high-standing titles 
and occupations, even if unremunerative ; but it is also 
largely due to the fact that in the agricultural and com- 
paratively backward South competition is much less keen 
and well-developed than it is in the more commercial 
North. This alone explains how it happens that the pro- 
portion of unemployed among the negroes is less than 
one-third as great as it is among white domestics and 
laborers, a class certainly surpassing the negro in both 
education and energy. 

The Decline of Horizontal and the Growth of 
Vertical Competition. Fig. 19 shows, by its three 
curves, factors pointing to the continuous and recently 
rapid extension of the above process. 

Curve A shows the growth of capitalism per manufac- 
turing establishment, in terms of that prevailing in 1850 
as unity. 

Curve B shows the growth of capitalism per employee 
in the same, similarly referred to that of 1850 as a base. 

Curve C shows the proportion of capitalism to wages 
in manufacturing establishynents, similarly referred to 1850 
as the standard. 

In interpreting these curves it must be remembered that 
they are based upon data stated in terms of valuation, not 
value. 

Curve A shows the growth of capitalism per manufac- 
turing establishment. It thus measures approximately, 
though not exactly, the progress of consolidation in manu- 



THE GROWTH OF DISSIPATION 



273 



facture. To this extent it is also a measure of the dis- 
appearance of horizontal competition. That is what 
consolidation is for: (i) to save to the combining estab- 
lishments the cost of mutual competition; (2) to 



B 



iS6o i860 iS'^o idSo iS^o ipoo 

Fig. 19. The Decline of Horizontal and the Growth of Vertical 

Competition 

Strengthen them for vertical competition against the 
Labor and the Consumer below them. The public, think- 
ing competition to be a source of economy, blames them 
for removing it. The "trusts," wishing to allay the 
turbulence resisting their taxation, reply that the people 
get the benefit of these economies due to the elimination 
of competition. 



274 THE COST OF COMPETITION 

It Is doubtful if it be worth while to disprove that state- 
ment, or misstatement. It Is doubtful If any serious-minded 
person takes it seriously. But If disproof be needed, these 
various curves give It. If the horizontal competition which 
disappears is not replaced by that more vigorous vertical 
competition against the consumers and employees below 
for which the situation gives opportunity, then all of these 
curves should show a decrease of all of those factors which 
are the Inevitable accompaniment of competition. In 
other words, if the decrease In horizontal competition 
which Is plainly visible In current consolidation Is accom- 
panied by that decrease in vertical competition which the 
trusts allege, then the total competitive effort of the country 
must be doubly on the decrease, and all of these curves 
will show it. But none of them do so. The total amount 
of competitive effort Is plainly shown to be steadily and 
rapidly upon the Increase. It Is hinted at by curves B and 
C of Fig. 20, each showing a part; It Is shown In full by 
the total darkened area of Fig. 12. Since the equally 
steady and rapid decline of the total volume of horizontal 
competition Is universally admitted to be taking place 
(although the Intensity of competition over each detailed 
transaction which still lies open to It Is ever increasing), 
this must mean that both the volume and the keenness of 
vertical competition Is Increasing In geometrical ratio. 
This conclusion Is corroborated by any cursory observa- 
tion of current economic progress : the rising prices of the 
staple commodities and the decreasing purchasing-power 
of the wage-earning consumer. 

The Evolution of Manufacturing Methods. The 

tendencies of the times are shown plainly in the prog- 
ress of manufacturing conditions during the decade from 
1890 to 1900, though the statistics of manufactures do 
not commensurately reveal the similar progress for the 



THE GROWTH OF DISSIPATION 275 

country as a whole because of the specialization upon com- 
petition which has already been mentioned. During the 
decade in question: 

PER CENT. 

The Number of Salaried Officials, Clerks, 

etc., decreased 14 

Their aggregate salaries increased 3 

The Wages of the Workmen increased. . 23 
The Valuation of the Products increased. . 39 
The Valuation of Raw Material consumed 

increased 42 

The Capitalism increased . 50 

The " Miscellaneous Expenses," which in- 
cludes the bulk of those chargeable to the 
Cost of Competition, increased 63 

Most of the " salaried officials and clerks " are those 
engaged In shop-accountance. The decrease In their 
numbers shows plainly the consolidation going on. The 
Increase of 3 per cent, in their Incomes cannot con- 
stitute a true increase in proportionate activity gone In this 
direction, for the products resulting from their efforts have 
at the same time increased by 39 per cent. In fact, 
the figures only become Illuminative when based upon 
valuation of output. Thus translated they appear, in per- 
centage of alteration per dollar's worth of commodities 
produced : 

PER CENT. 

Number of Clerks, etc., decreased. ... 38 

Their aggregate salaries decreased. ... 26 

Aggregate wages decreased ii-5 

Valuation of Raw Material Increased. . 2.2 

Capitalization increased 8 

Miscellaneous expenses increased 17 



276 THE COST OF COMPETITION 

If, as is urged by the " trusts," and by most business- 
men as well, the valuation of commodities visible in their 
market-price is based upon their cost of production, the 
saving of cost through consolidation going to the consumer, 
why do not the figures for wages and salaries saved find 
the figures for valuation of output following them closely ? 
Since they most plainly do not, where does the saving go 
to? Most plainly, also, into those items which have 
increased. Wages and salaries have both decreased per 
dollar's worth produced ; capitalization and "miscel- 
laneous expenses " have increased and swallowed the sav- 
ings up. Increase of capitalization means increased 
interest-payments. Increased " miscellaneous expenses " 
means the stretching of an elastic canopy which covers, 
we fear, a multitude of sins. Not only does it include 
such normal items as advertising, legal counsel, etc., which 
are purely costs of competition, but it is usual to charge up 
to just such non-committal ledger-accounts the payments 
made upon the most questionable scores which investiga- 
tion of the corruption of government officials has yet 
revealed. That such might naturally be the case is the 
more obvious because the elimination of horizontal com- 
petition between peers, which is so evident in the dismissal 
of the clerks, correspondingly eliminates all excuse for 
increase in the more legitimate expenses of competition, 
such as advertising, etc. The extra money made available 
by this saving is used to somewhat increase the intrench- 
ment of the organization against the demands of labor, 
but much more generally to fortify it more Impregnably 
against the consumer. And when horizontal competition 
is once removed, the only rampart left to the consumer is 
his representative government and its law. It is against 
the disruption of this institution, therefore, that the most 
powerful ammunition of the barterer is directed. 



THE GROWTH OF DISSIPATION 277 

Fig. 20 presents the general lines of recent evolution 
of the manufacturing portion of our industrial body, based 
upon the statistics of manufactures in the United States 
censuses. The several curves show the variation of the 
several factors entering into manufacture per million-dol- 
lar/'worth of product. The object of this choice of basis 
is, among others, to eliminate temporary fluctuations in 
the prices in which commodities are measured. That this 
is accomplished is shown approximately by the regularity 
of the curve EE, exhibiting the value of raw material 
entering into each million dollars' worth of output. ^ The 
only reason why this might vary is the inclusion, in the 
later decades, of a greater amount of alteration of this 
raw material in a single " establishment," as the result of 
consolidation, which would cause the curve to drop. 
Although " consolidation " does not necessarily imply this, 
referring rather to consolidation of ownership than of 
factories, it is quite likely to have happened.^ If it has, 
it is not revealed by the curve, which remains sensibly 
horizontal. The only thing which could keep it so, in the 
face of such concentration of productive^ processes, is^ a 
general rise in prices of raw material, which is also quite 
probable, though not proven. 

Curve AA shows the number of establishments per 
unit-valuation of output to have enormously decreased. 
Viewed upside down, this would give an idea of the valua- 
tion of output per establishment. This proves, more than 
anything else, that the scale upon which all productive 
processes is carried out has grown egregiously.^ 

The curve BB shows the capitalization per unit of valua- 
tion of output. Until 1880 the natural tendency of the 
real worth of material capital per unit of output to remain 
constant is obvious; but by that year the bargainers had 
learned the value which could be diverted into their 



278 THE COST OF COMPETITION 

.A 




-200 



-iOO 



1660 i860 iS^o i88o i8qo moo 

Fig. 20. The Tendencies of the Times in Factory-organization 



THE GROWTH OF DISSIPATION 279 

pockets by the artificial inflation of the capitalization 
attached to this capital, and thereafter it rises rapidly. 

The curve CC shows the number of wage-earners per 
unit of output, steadily decreasing. Now, if it were true 
that the wage of the producer were based upon his pro- 
ductivity, this very marked drop in the number of workers 
required to produce a unit of valuation should result in 
the return to the wage-earners of an inverse, a greater, 
proportion of the valuation produced. Curve DD shows 
what they actually get. Instead of its being in inverse 
proportion with CC it is in direct and fairly proportionate 
parallelism: the less the number of workers required to 
produce a dollar's worth of goods (or the greater valua- 
tion produced per workman) the less of that dollar goes 
to labor as wages. 

The curve FF shows the decrease in number of '' salaried 
officials, clerks, etc."; also quite approximately the 
decrease in aggregate cost for their salaries. It is this 
saving which the " trusts " assure the public it is the object 
of their consolidations to conserve to the people. 

How sincere is this representation is shown by the curve 
GG, which exhibits the increase in " miscellaneous ex- 
penses," going wholly to increased cost of competition, 
and (as pointed out above, since this very consolidation 
has decreased horizontal competition) entirely to increased 
keenness of vertical competition against the consumer. 

How sincere is this representation is also shown by 
adding together the expenses for the " salaried officials 
and clerks " (which was to be saved to the public) and the 
" miscellaneous expenses " having chiefly for their object 
the more complete enthraldom of the public in the power 
of these barterers. In 1890 the two together amounted 
tO' $109,100 per million dollars' worth of manufactured 
commodities; in 1900 they amounted to $109,900. All 



28o THE COST OF COMPETITION 

that was saved by the consolidation, and more, has been 
lost in increased " cost of doing business." So far as the 
public can see from these items alone, it has lost just $800 
per million by the ten years' progress. But in point of 
fact it has lost very much more; for the $11,700 of 
increased cost of doing business per million has been 
expended entirely in insuring the further loss of the public 
in other departments of supply than mere manufacture, 
in trade, transportation and finance, none of which is 
visible in the statistics displayed. 

That commercial (not factory) consolidation does not 
necessarily lead to economy in production is shown by the 
rise, during the decade of 1 890-1900, of the curve AA, 
which had fallen steadily and rapidly since 1850. During 
this decade the consolidation of commercial interests was 
more phenomenal than ever before in economic history, 
particularly in 1898-99. Yet the figures show an actual 
decrease of valuation of output per *' establishment " ; the 
latter word being understood to mean the material fac- 
tory, and not the unit of commercial organization. In 
either case the showing is bad enough. 

Specialization Upon Vertical Competition. The 

rapidly increasing specialization upon competition makes 
any direct measure of this increased pressure of verti- 
cal competition next to impossible. Entire corporations 
are formed for the purpose of carrying on competi- 
tion, relegating the actual manufacture more and more 
plainly into the hands of salaried superintendents or of 
quiescent corporations which perform the same function, 
the latter often being paid in the same manner. Nor is 
it alone that these corporations specialized upon competi- 
tion are getting to be the rule; they are coming to monopo- 
lize the best personal talent of the country and to grow to 
a size which their productive partners do not seem to 



THE GROWTH OF DISSIPATION 281 

be able to follow. In addition, a whole species of other 
corporations is springing up, each specialized upon some 
weapon of their warfare. There are corporations for 
writing their advertisements, and corporations for illus- 
trating them. There are corporations for mailing their 
tracts. There are corporations insuring them against the 
results of counter-attack by employees. There are others 
insuring them against a like desperation on the part of the 
public. There are corporations for providing them with 
capitalism. There are corporations for securing them 
franchises, charters, etc.; of which last class by far the 
most efficient is the unchartered corporation known as the 
political machine, which is just as purely a profit-making 
organization as is any of the others, and for which these 
others supply the daily sustenance and vital energy in their 
patronage with a share of their net profits. There are 
even schools and periodicals devoted to training for suc- 
cess in almost every department of the above tactics; in 
all of which " success " means pushing your neighbor back 
and getting in ahead of him — for one cannot get in, in 
barter, except by pushing another out. 

Referring to Fig. 7 (page 198), the increase since 1850 
of the area measuring capitalism, in proportion to the 
area lying below it, is indicated in part by curve C of Fig. 
20. It is only in part, however, for Fig. 20 refers only 
to manufacturing establishments, and the great bulk of the 
recent expansion of capitalism has been in the formation 
and development of corporations devoted purely to bar- 
gaining, not manufacturing. The growth, though com- 
paratively slow, has been very steady; unbroken even, as 
have been most of the other processes, by the Civil War. 
It is thus seen that the doctrine of the Karl Marx school 
of socialists, holding that poverty is due to the income 
drawn away from the producer by capitalism, while pos- 



282 THE COST OF COMPETITION 

sessing a firm foundation in fact in so far as some income, 
and a steadily increasing one, is thus abstracted, is never- 
theless totally incommensurate to explaining the situation. 
Fig. 7 itself shows this. Also, compare curve DD of 
Fig. 14 with curve C of Fig. 20. The former is what 
.the producer is losing; the latter is what capitalism is gain- 
ing; portrayed upon comparative vertical scales, more- 
over, which almost conceal the contrast which is really 
there. 

The same argument covers Henry George's single- 
tax explanations of progress and poverty. Vertical com- 
petition taking the form of private ownership of land, 
or landlordism, is oppressive to the producer. There can 
be no question as to that. The same is true of vertical 
competition taking the form of the private ownership of 
the material aids utilized in production, which is what 
Marx indicts. But both together constitute only the area 
labeled " capitalism " in Fig. 7. They are hopelessly 
outclassed when it comes to explaining the enormous 
volume and the bitter intensity of the oppression of the 
producer which results from the combination of both ver- 
tical and horizontal competition, of landlordism, capital- 
ism, barter-cost and net profits heaped together, with the 
Submerged Tenth for a foundation and an essential part. 

Production and Consumption. If that portion of 
Fig. 12 which applies to the year 1890 be compared with 
Fig. 17, a very important point of contrast is revealed. 
Earlier in the analysis it was shown that while the presence 
of barter enforced an equivalent deduction from the pur- 
chasing-power of the entire population, and that, in turn, 
the idleness of a minority, yet the number of absolutely 
idle was a small one in comparison with the volume of 
competition. In other words, that the tax put upon Labor 
by Barter is distributed over the entire body fairly evenly, 



THE GROWTH OF DISSIPATION 283 

reducing all individuals to a purchasing-power far below 
their natural productivity, but reducing only a few to 
complete Idleness. For these statements there Is now 
some statistical support. The figures show that In 1890, 
for instance, 59 per cent, of the nation's purchasing- 
power was dissipated In competition. In that year the 
percentage of unemployed population varied from o . 8 
to II .4 per cent., according to class; and as the purchas- 
ing-power represented by the classes revealing the greatest 
proportion of unemployed is much less per capita than 
that of the others. It Is probably fair to say that not over 
3 per cent, of the total purchasing-power was allotted 
to population entirely Idle. In other words, 41 per 
cent, of the total purchasing-power, which portion alone 
Is expended for life-giving commodities which are actually 
consumed and subsisted upon by the entire Productive 
Division, is capable of furnishing support for fully 97 
per cent, of the total industrial body, and for more than 
97 per cent, of the country's industrial ability. It Is this 
fact alone which has permitted competitive effort to 
assume such egregious proportions without either actually 
starving the community into extinction or oppressing it 
Into bloody revolt. 

The bearing of this fact upon our understanding of the 
relation between production and consumption Is marked. 
It corroborates the statement already made, viz. : that 
human ability to consume is the most elastic factor In 
social energetic phenomena. Upon an earlier page we 
urged Its ability to expand Indefinitely, as fast as permitted 
by expanding supply. Now we see its ability to undergo 
compression. In the productive classes Is Instanced the 
ability to maintain life, continuously and productively, in 
simple but In one sense wholesome fashion, upon a pur- 
chasing-power or consumption equal to about one-third of 



284 THE COST OF COMPETITION 

the actual productivity sustained thereon. In the layer 
of barter and capitalism is instanced the ability to con- 
sume, in the economic sense of the word at least, a cur- 
rent income not only far greater than the productivity 
which is supported thereon (and which is often zero), 
but greater than any degree of individual productivity yet 
known to man. In other words, to whatever point the 
allotment of purchasing-power may be artificially shrunken, 
or swollen, provided only that It does not fall below the 
starvation-wage, consumption easily and promptly fol- 
lows It. Viewing all biological factors together, the 
lower limit of fluctuation is the starvation-wage; below 
that life Is Impossible. There Is no upper limit. 

When the pessimists wish to explain poverty they urge 
the great faculty for unlimited consumption evinced by 
the unthrifty, extravagant poor, so frequently exceeding 
their income — in short, that the trouble with the country 
is that the lower classes consume too much. When these 
same pessimists wish to explain the common lack of oppor- 
tunity for employment and the apparent necessity for low 
wages, they point out that the trouble with the country Is 
that It does not, cannot possibly, consume all that It can 
produce, whence some must be Idle — In short, that all 
classes consume too little. 

The true statement of the case is that whereas the con- 
sumptive power of all classes of a people Is always bio- 
logically unlimited, economically It Is always narrowly 
limited, by Its allotted purchasing-power. There Is no 
such thing as overproduction, of which the manufacturers 
so bitterly complain when excusing to the public their 
efforts to put up prices by restricting the output; the sup- 
pliers of shoes or beef or flour need lisp no faintest syllable 
of complaint of overproduction so long as so many are 
barefooted and hungry. The trouble everywhere is 



THE GROWTH OF DISSIPATION 285 

underconsumption, not overproduction; and lower prices, 
not higher ones, are what Is needed to remedy the 
situation. 

Nor Is there any such thing as overconsumptlon, that 
terrible crime for which the favored few indict the poor 
(who consume the least) when sermonizing them; that 
crime of which the upper economic classes alone are guilty, 
spending upon a single vulgarly ostentatious evening's 
entertainment a sum which would solve so many social 
problems had it only been left in the hands of those who 
produced and earned it. 

But there Is always and everywhere, except on the part 
of this small and seemingly fortunate minority, that really 
terrible, tragic social fact: Underpurchasing-power — a 
purchasing-power below actual productivity and below 
natural consumptivity, a purchasing-power thus artificially 
depreciated by Barter. This is the one master-key for 
unlocking every economic phenomenon which is now 
sealed to the understanding. 

Congestion. -One of the most direct and obvious 
results of the competitive system is geographic social 
congestion. Under this title must be considered some 
four quite distinct sorts of congestion, viz. : ( i ) the 
Offices; (2) the Residences; (3) the Slums; (4) the 
Factories. These have been listed in the order of their 
causative effect, of their remediabillty and of their Impor- 
tance to the ethical growth of the community. 

The political economies of Karl Marx and of Henry 
George are the only ones now before the public explain- 
ing general social phenomena, such as congestion, as the 
fruit of institutions rather than of individual choice. From 
the point of view of the single-taxers It would appear that 
all congestion were due to private control of land-values. 
They would point out that Edinburgh, Barbados and 



286 THE COST OF COMPETITION 

Canton were congested before the era of modern com- 
mercial competition. This last is quite true; but it is true 
only because antagonism over land-values was historically 
the first form of commercial competition to become politi- 
cally free for effective activity. Landlordism, in effect, 
is as old as the feudal system. That is good reason for 
pointing out the feudalistic evils of landlordism. At the 
same time, it is a poor basis for urging that landlordism 
was all of feudalism, or that the feudalistic features were 
the only objectionable ones of free landlordism. 

It were similarly futile to attempt to confine the explana- 
tion of all forms of congestion to antagonism over land- 
values alone. The old question of the land and the man 
is there, it is true, and causes congestion, in 1905 as well 
as in 1805, or in 1405, when the villages were crowded 
while the royal preserves were spacious. But in the 
passing centuries the quarrel over opportunity has shifted 
ground again and again, and the land-question has found 
itself fighting under many different standards and with 
many strange companions. But it has never been a 
leader. Always a helper, always an unknown esquire to 
some gallant knight of the fight for liberty, under whose 
standard it did effective work, it has slowly won obscure 
advancement. In 1405 it was bound up with questions of 
individual liberty and constitutional freedom from mo- 
narchical oppression — vastly larger and quite distinct ques- 
tions from landlordism; for no effective freedom of land- 
tenure were imaginable, assuming the abolition of serfdom 
and landlordism both, under the political and legal chaos 
of the fifteenth century. To-day it is bound up, indis- 
solubly, with the question of the legal assurance to every 
man of freedom from all forms of economic oppression — 
equally larger, more important and inclusive questions 
because the effectiveness of legal economic oppression 



THE GROWTH OF DISSIPATION 287 

depends very little upon the particular tool or weapon of 
which it may make use, whether land, capital or exchange. 
And since the amount of contention and oppression which 
can be centered about any given weapon is absolutely 
unlimited, assuming once that the law permits contention 
at all, the taking from the hands of the bargainers of all 
control of land-values will not necessarily restrict the 
aggregate volume of Barter nor the oppression of the poor. 
Assuming the land to be perfectly freed, we see the 
individual producer still standing (figuratively, of course) 
idle in the center of the field reserved to him by law, 
because of his lack of access to tools, to cooperation with 
other workmen and to a market; or we see him working 
frantically, the little Value which he may be able to dig 
single-handed from the soil becoming absolutely inade- 
quate to support life under present populations and 
methods, because diluted to any degree desired by the 
bargainer before it may become purchasing-power in 
exchange. Until he had undertaken and carried into effect 
a demand for freedom of access, as an inborn right, under* 
the protection of law and public opinion, to those tools 
which are the creation of and which are absolutely essen- 
tial to the efforts of the modern armies of workmen in 
Production, and to the public market which is equally 
essential to Exchange, he would find his accomplished 
freedom of access to his land a valuable acquisition only 
in the nature of an established principle and an abstract 
precedent. Economically he would be better off only 
temporarily, until expanding Barter were able to reab- 
sorb this new lease of life to the Producer, this new growth 
of its prey, this added possibility of extracting profit from 
the producing-body while still leaving it alive. 

This is why the land-tenure question was not settled 
when serfdom was abolished and the villein freed from 



288 THE COST OF COMPETITION 

his village, nor when a constitutional government was 
wrung from monarchical despotism, nor even when the 
virility of Europe had landed upon a virgin western con- 
tinent and found Itself free to effect fundamental reforms 
In liberty's name — ^there never being a finer chance, appar- 
ently, to keep the free land free. The Supreme Intelli- 
gence placed In Its hands. Instead, a democratic form of 
government, freedom of political action and of religious 
belief, both feeding the soul and being of more Importance 
to the patriot than the freedom of the soil which feeds 
only the body — freedom of man's attitude toward man 
coming before freedom of man's attitude toward the clod. 

Therefore, In these pages, the use of land-values as a 
weapon for oppresslonal barter will be deemed merely 
one with the use of other economic opportunities for the 
same purpose. It Is even more obvious that the use of 
capitalism to extract current taxes from the produclng- 
body, which Is the basis of the Marxian conclusions, Is 
merely another subdivision of Competitive Dissipation 
as It has been defined In earlier pages. 

( I ) The Offices are congested because men cannot bar- 
ter at more than arm's length from each other. The pro- 
duction of two commodities may take place at points the 
most widely separated, their actual exchange may take 
place upon passing freight-trains, anywhere, under the 
guidance of factory-superintendents; all of these matters 
can be handled by correspondence. But the question of 
price of exchange, — assuming, of course, that there Is a 
real question as to the price, to be settled only by the 
expenditure of effort, — can be determined only by eye- 
to-eye conference, by audible word and visible gesture of 
bargainer to bargainer. Men have gathered themselves 
Into company for all manner of reasons In the past; but 
speaking only of the modern phase of concentration, which 



THE GROWTH OF DISSIPATION 2^9 

has reared our city-outlines against the sky from fifty to 
three hundred feet above the soil within a quarter-century, 
— considering only the civilization of the sky-scraper, the 
subway and the stenographer, — its center and soul is the 
need of barter between man and man before each little 
detail of exchange, before any little ton of rails, bag of 
coffee, branch-railroad in Arizona or dozen of hairpins 
can get itself transferred to the ownership which needs 
it from that which needs something else. 

(2) The Residences are congested because the Offices 
are congested. Men cannot meet each morning for barter 
in Wall Street and live further away than Stamford. They 
prefer to live not further away than Eightieth Street. If 
the love of a vine and fig-tree Is strong within them. If they 
are inspired by the ideals of a real home and homestead 
for their children to grow up In, they will undergo the 
suburbanite's daily tortue In order to get It. If they hap- 
pen to have no family, or If they are weak enough to fail 
to appreciate It In comparison with being *' In the swim," 
they will consent to live In barracks In town. The whole 
natural tendency of man Is toward the vine and fig-tree, 
toward seclusion and spaciousness of home, however he 
may love the crowd and the dust In his work and his war. 
It is the artificial tendency alone which can lead him to for- 
get green leaves and snow-white fields behind velvet 
curtains. 

(3) The Slums are congested because the Offices and 
Residences are congested. 

The first step in establishing this statement Is to show 
the fallacy of the common Idea that the slums are con- 
gested because the factories are congested. This Is obvious 
when it is observed that the cities of the greatest slum-con- 
gestion are not distinctly factory-cities; the populations 
suffering the greatest congestion are not essentially factory- 



290 THE COST OF COMPETITION 

operatives. It is of course true that many, if not most, fac- 
tory-populations suffer an undesirable degree of congestion. 
But so do many other classes of society; all, indeed, except 
the farmers, who are too much isolated for health. It is 
still true that the worst congestion is not coincident with 
factory-life. New York is the worst congested city in 
America, and it is distinctly not a manufacturing city; it 
is a business and a residential city : the center of commerce, 
transportation, art, amusement and social luxury. The 
population of its East-Side, while containing many factory- 
workmen, is not by any means a factory-population. It is 
typically one of corner-grocers, saloon-keepers, janitors, 
domestics, hucksters, bootblacks and sweatshop tailors. 

These people choose to live in this place and way for 
exactly the same reason that any other individual chooses 
his own peculiar place and way of living: because it is the 
easiest. The office-buildings down-town and the residences 
up-town, in their daily chores and supplies, offer a vast 
demand for steady employment which cannot be par- 
alleled elsewhere in the land. Factory-demands for labor 
fluctuate tremendously, but the demand of a settlement 
like New York for breakfast-foods and clean collars 
varies hardly appreciably. The annual indignation of the 
daily press over the lack of fieldhands to harvest the 
wheat-crops of Dakota, — three weeks' work at the end of 
a thousand miles of travel, — is based upon the most super- 
ficial observation of other people's needs and opportunities. 
There could be no indignation like that of these same 
worthy city-bred objectors if, awakening some fine morn- 
ing, they should find that the milkman had taken their 
advice and gone to New Hampshire, a-haying, that the 
postman was raising melons in Illinois and that the cook 
and maid had married Texas ranchmen. Nor would it 
equal that of the Western cities when, six months later, the 



THE GROWTH OF DISSIPATION 291 

tramp-population of farm-people unable to live through 
the winter had been augmented by this flood of " relief " 
of Eastern congestion. There is no problem confronting 
the lower classes like that of steadiness of employment; 
and nowhere are its chances so good as in a great congested 
city. 

Again, these people live in great cities because it is 
cheaper and easier than elsewhere. All industries can be 
conducted upon a large scale more cheaply than on a small 
one, and this statement applies fully to the supply of food, 
clothing and shelter. It is a matter of observation that 
nowhere in this land, not even in Nova Scotia or Alabama, 
can the necessaries and the distractions of life (the former 
including the latter) be had at so low a proportion of 
average income as in Manhattan. Life, it Is true, is there 
reduced to a combination of food-supply and forgetful- 
ness; but that is the inevitable result of the competitive- 
wage system: to reduce life to its lowest possible terms. 
Moreover, it is true of all classes in Manhattan. When 
the upper classes are content with a twenty-foot front of 
brown-stone, with sunlight in one-quarter of its rooms and 
a cobble-stone nerve-rack before the door, how can the 
lower ask for sunlight at all? Two rooms and a window 
on an air-shaft are enough for anybody ! Both upper and 
lower classes, worse luck, believe it. They both accept 
it for exactly the same reason: that it is easier to accept 
it than to work the harder, and with greater uncertainty, 
for light and air elsewhere. 

(4) The Factories are congested because the slums are. 

It Is first to be noted that the factories are the least con- 
gested of any of these items. The great bulk of the fac- 
tory-production of the country is carried on in the smaller 
cities, towns and villages. Even the few distinctly manu- 
facturing cities of the larger size, like Pittsburgh, have 



292 THE COST OF COMPETITION 

their factories scattered over an exceedingly wide area, 
concentrating into centers, such as Homestead, Wilmer- 
ding and Allegheny, which are separated by ample oppor- 
tunity for light and air. But the typical American factory 
is located in a smaller place than Pittsburgh, of one to 
one hundred thousand inhabitants, or even smaller, where 
access to open fields is a matter of a few moments on a 
trolley, or even on foot. The extreme is seen in New 
England, and in some Southern States, where so many 
efficient mills are almost hidden in some bosky vale, 
perched on the hillside by a bit of water-power, with the 
railroad wriggling in along the river-bank. 

These factories locate according to favorable supplies 
of power, transportation or labor. While either or all 
may be the determining factor in any single case, it is plain 
that the last may often be, and is, the all-important one. 
Therefore those factories which need skilled workmen of 
some taste, or clean-habited young women from the self- 
respecting walks of life, choose those outlying smaller 
cities where small homes may be secured or where the 
farmers' and mechanics' daughters like to work a few 
years between school and marriage. Those factories which 
want the cheapest of unskilled, transient help, on the other 
hand, can find a steady current of it oozing out of and 
being reabsorbed by the vast mass of mixed population of 
the slums. That is the reason, and the only reason except 
special ones, why a minority of factories crowd into the 
congested districts of our larger cities, where land-rent is 
high and transportation difficult and costly. 

As to the compression of the factory itself, of the need 
for the close association of an army of workmen, that they 
may cooperate, factory-architecture and engineering have 
already progressed (so far as possible against the resist- 
ance of the economic forces which are here being por- 



THE GROWTH OF DISSIPATION 293 

trayed) to the point where It Is agreed that the best quality 
of productivity comes from a series of low and spreading, 
well-lighted, well-aired buildings, separated by tracts of 
grass, trees and flowers when the ground is not absolutely 
needed for railroad-tracks and driveways. If produc- 
tivity were as profitable as Is profit-seeking, the question 
would have been settled long ago. As it Is, where a 
motive for beautifying factory-surroundings and Interiors 
exists at all. In the presence and personal Interest of a 
capitalist-owner of taste and sensibility, there Is no trouble 
In putting his Ideas into effect, and with profit to the fac- 
tory-community. Much remains to be done in this line, 
it Is true ; but when it is done, as It surely will be, It will 
be found that it was purely economic, and not engineering, 
discoveries which made It possible. 

But If the economic situation Is to be understood. It 
must never be forgotten that every one of this myriad of 
factories, scattered over the face of the land, has an office 
or an agent, of some sort, In the most congested district 
of New York, if not In several other great cities also. 
With these offices Is constant communication, by a net- 
work of wires and postal-routes, and from these barter- 
agents come the orders, or the lack of them, which make 
or break the factories and their hands. It Is the profit- 
making interests of the agent, not the productivity of the 
factory, which determines whether it shall live amid 
green grass and trees, or live at all, or not. It Is what is 
done on Nassau and Cortlandt Streets which determines 
the purchasing-power and the chooslng-power of the 
hammer-blows ringing out In Pittsburgh and Dubuque. 
Congestion as a Unit. These four sorts of conges- 
tion all possess their origin In competition over the three 
chief needs of economic life : land, capital and exchange. 
Commercial competition over land-values consists In the 



294 THE COST OF COMPETITION 

crowding up of commercial rent above natural rent, for 
the sake of pocketing the difference, and of holding land 
vacant for the sake of later pocketing the unearned incre- 
ment; both of which force people to squeeze themselves 
Into smaller and smaller compass In order to minimize the 
effect of this policy which may fall upon their shoulders. 

Commercial competition of capitalism with consumer, 
securing interest and dividends, works to the same end in a 
number of ways. It Increases the cost of transportation 
and of communication, so that wide areas are less avail- 
able for a given population than would otherwise be so. 
Lt Increases the rental paid for the Improvements on the 
land over their natural current cost: depreciation, so that 
a low rent for site would avail little to decrease conges- 
tion because the producer could not afford the Improve- 
ments which are essential to Its enjoyment. It Increases 
the cost of all manufactured or transported articles, so 
that a lesser fraction of the producer's Income may go to 
hiring spacious sites and buildings. 

Commercial competition over exchange, by Its mere 
cost, creates congestion In a manner which these other 
causes share, but to a degree In which they have no part, 
In three distinct ways, viz. : 

( 1 ) By decreasing the demand for productive labor 
below natural productivity, and thus diminishing natural 
incomes ; 

( 2 ) By diluting the purchasing-power of wages actually 
received, so that the recipient must be content with a much 
smaller scale of life, including land and Improvements 
occupied, than would otherwise be the case. 

(3) By forcing men to seek a much more frequent and 
intimate contact with each other, per dollar's worth of 
production effected, than Is even now deemed essential to 
the administration of productive processes. For the 



THE GROWTH OF DISSIPATION 295 

management of different lines of production in consonance 
to-day merely occasional conferences at stated dates, of 
factory-superintendents and heads of departments, are 
deemed necessary; but for the pushing for the orders which 
keep these factories at work, or for the maintenance or 
inflation of the price at which its goods are sold, must go 
the constant strenuous endeavor of the bargainers who 
represent them upon the market. 

Each of the four sorts of congestion owes its size and 
form to each of the three weapons Involved, viz. : land, 
capital and exchange, in varying proportion. To separate 
the three accurately in each case would perhaps be pos- 
sible, with time; it is certain, however, that it would not 
be profitable, at any rate, here and now. It is needful, 
however, to point out that all three causes do enter, and 
varyingly. In some cases congestion is due almost wholly 
to the private control of land-values; again, it is capitalism 
or barter-in-exchange which visibly produces the pressure. 
If the single-taxers may say that it is the artificially 
high rents which enforce congestion, the socialists may 
reply that it is the diluted purchasing-power which denies 
the ability to pay the rents, however high or low. If all 
forms of competition except that over land-values and 
incomes were abolished, the average producer would have 
over twice the purchasing-power with which to pay the 
high rents. If it is the high rents which cause the conges- 
tion, it is also the congestion which causes the high rents. 
Neither would be wholly right, nor wholly wrong. The 
display of the evils of landlordism has been accomplished 
by the single-taxers with such skill and fullness, albeit 
with some slight error, that there is no need to reproduce 
them here. The evils of capitalism have been less ably 
presented by Karl Marx, but they are more obvious. 

It is necessary, however, to point out that there are 



296 THE COST OF COMPETITION 

forms of economic pressure toward congestion and the 
starvation-wage in which neither of these institutions 
enters to more than an insignificant degree. Let us dis- 
cuss one fact worthy of consideration : A seat in the New 
York Stock-Exchange is worth upwards of one hundred 
thousand dollars. Upon this totally unnecessary invest- 
ment must the buyer of whatever is made by any of the 
" industrials " handled therein help to pay the interest. 

Why is this as it is? Why is it that men slow enough 
to pull out that sum for an orphan-asylum will be glad to 
buy with it entrance into that pandemonium? It cannot 
be ground-rent which explains it; for high as are rents in 
Broad Street, they would amount to comparatively little 
when shared by each member of the Exchange. More- 
over, the rent, both of land occupied and of the improve- 
ments thereon, is covered by the current dues paid in, quite 
Independently of the initiation-price. This enormous sum 
is paid purely for a privilege, the privilege of being on the 
firing-line in the commercial warfare called competition, 
the same privilege as that contended for amongst the fish- 
ermen on the shore when a single hunter appeared offer- 
ing hares in trade. So profitable is the avocation of exact- 
ing profit by controlling exchange that this sum is paid 
for the mere privilege of attempt at It, with no assur- 
ance of success. The burden placed upon the country by 
the presence of the stock and produce exchanges, with their 
accessories. Is grievously heavy; but in It the private con- 
trol of land-values plays a part absolutely insignificant. 
The proportion even of capitalism in the evil is very small; 
the dividends paid upon any stock are very much less than 
the profits made out of Its repeated unnecessary sale and 
purchase. The burden is almost wholly one of Barter.^^ 

^2 Incidentally the situation reveals the complete independence of barter 
and exchange. In the handling of stocks and grain on 'Change it is not 



THE GROWTH OF DISSIPATION 297 

Congestion and the Transportation-Problem. It 

is finally to be noted that the entire competitive institu- 
tion constitutes a causative source of congestion. It is not 
to be accepted that people live in tenement-houses because 
they like tenement-life, nor that they have an office on 
Park Row and a residence in Nyack because they like 
daily cars and ferries. They live so because a greater 
population can find support living thus, under existing 
institutions, than is possible with refusal to live so. There- 
fore the increasing population constantly coming into 
existence through the divine law of multiplication swarms 
into the cities because it can find support there easier than 
elsewhere. This centripetal tendency will be limited only 
by the inability to find opportunity for self-support. 
Therefore anything which makes it easier, literally or 
figuratively, for the individuals of a vast population to get 
into touch with each other, any improvement in horizontal 
transportation by rail or boat or flying-machine, or in ver- 
tical transportation by elevator, or in communication, per- 
mitting two million people to work together as easily as 
did one million before, inevitably makes for congestion. 
It cannot in any wise be regarded as a reducer of conges- 
tion. When, for instance, the Brooklyn Bridge first over- 
shadowed the ferries, extinction was predicted for the 
latter; but instead, they are now carrying greater crowds 

the goods which change hands, and therefore . increase in usefulness, but 
merely a paper memorandum of a legal fiction of ownership. It is said that 
each bushel of wheat passing from Chicago to New York is bought and 
sold some sixty to one hundred times. Here the change of ownership has 
not one iota of the natural value of exchange, from hands able to grow 
more wheat than they can eat to those able to produce other things but 
needing wheat for food. Here exchange exists, is forced into artificial, 
burdensome existence, solely for the sake of attaching barter-profit to it. So 
much more profitable is barter for the Acquisition of wealth than is ex- 
change for its Production, that the latter has become a mere puppet attendant 
upon the former. 



298 THE COST OF COMPETITION 

than ever before. When the elevated roads were built the 
surface-roads revealed the working of the same law. The 
operation of the new subway will be to the same end, to 
accentuate congestion, not only In the terminal districts, 
but In the traffic Itself, to a point now unknown. There 
Is no possible explanation of the congestion of the tall 
office-buUdlng, blotting out the sky and making canons of 
our streets, to rival that of the high-speed hydraulic ele- 
vator. No worse source of an exaggeration of that con-, 
gestlon could be Imagined than the Invention of still more 
capacious and more highly speeded railway-trains, trolley- 
cars and elevators than those we now have. 

To all those who clamor for more cars In order to re- 
lieve overcrowding, therefore, these considerations are 
respectfully dedicated. They are but Instances of the 
working of the law which has been stated early and often 
In this analysis: That whatever may be the progress of 
the arts and sciences, out of each step In advance the heart 
of comfort to mankind Is eaten and absorbed by a further 
and an entirely spontaneous growth of that Insidious 
natlon-paraslte. Barter. 

Insanity, Pauperism, Crime and Suicide. It has 

already been demonstrated that the dissipation of eco- 
nomic energy by barter, producing congestion and reduc- 
ing nutrition to the furthest degree compatible with life, 
and beyond, must reveal Itself ethically as a perversion of 
natural life Into violent outbursts and Immoral lesions. 
Just as. In mechanical energetics, Impact and friction dis- 
sipate motion-energy Into heat, the " waste-heap of the 
physical universe," so. In social energetics, competition dis- 
sipates or transforms otherwise good social economic 
energy into disease, criminality. Insanity, pauperism and 
suicide, the waste-heaps of the social world. Just as It Is 
faulty design, and not poor metal, which Is responsible for 



THE GROWTH OF DISSIPATION 299 

the occurrence of friction or Impact In the mechanical 
organism, where smooth and elastic parallelism of forces 
should prevail Instead, so. In the Industrial organism for 
the transformation of biological Into the economic energy 
of Value, It Is a faulty artificial relationship, and not a 
flaw In human nature, which causes antagonism to occur 
where cooperation should prevail Instead. 

Although this entire question belongs more properly to 
the ethical than to the economic side of the analysis, and 
is therefore discussed more fully In the Second Part, yet 
it Is Important to show plainly at this point the rigid con- 
nection between economics and ethics. What statistical 
light may be thrown upon the situation may better be dis- 
played here now, in parallel with the other statistical 
exhibits, than later. 

If economic degeneration and Its ethical consequences, 
crime, insanity and suicide, be truly an Immediate function 
of the volume of Barter in the land, and if the latter has 
grown by anything like the extent shown by these preced- 
ing diagrams, then It must be expected that statistics should 
feveal a marked growth In these most undesirable 
phenomena during the last half-century. So soon, how- 
ever, as the statistical question is opened In this connec- 
tion there arises a number of subsidiary, but Important, 
questions as to the validity of the statistics. That many 
of these doubts are valid the author Is prompt to admit; 
but that there Is still left some evidence of indubitable 
worth, after their full effect has been considered, he insists 
with emphasis. 

Thus, as to growth of insanity, for Instance, no true 
light is to be had from the statistics accessible to the 
ordinary inquirer. The multiplication of the private In- 
stitutions for the Insane and the progress In the care with 
which even the mildly Insane are now separated from the 



300 THE COST OF COMPETITION 

public has been such that the earlier records prove value- 
less for comparison with the more modern ones. The 
only thing to be reported is a general consensus of opinion 
among the authorities that Insanity Is steadily on the in- 
crease ; although at what rate opinions differ widely. The 
bulk of it, too, is now recognized, by the physicians in 
charge, as to be explained by nothing more mysterious than 
an unwholesome previous mode of life, sometimes more 
visible in the parent than In the patient, It Is true, but still 
a natural, explicable pathology, due, not to the wrath of 
God, but to the error of man. 

As to pauperism the records are much more reliable, 
although still unsatisfactory. They show a practically 
constant proportion of paupers to total population at all 
times since 1850. If the same statement might be made 
of the other waste-heaps of society than pauperism, our 
argument of barter-cause and degeneration-effect would 
find little comfort In statistical fact. Taken, however, in 
connection with the remarkable growth of crime and sui- 
cide, which Is shortly to be displayed, this fact Is one of the 
most luminous and encouraging of all relating to this entire 
question. It shows plainly that the great and Increasing 
bulk of the life which is squeezed out of shape by the 
pressure from above prefers crime or suicide to pauperism. 

This fact Is to be regarded as most encouraging to one's 
faith in human nature. In the first place Is the Instinctive 
abhorrence of the almshouse felt by all self-respecting 
people. The feeling is fundamental in human nature that 
each individual or family should possess sufficient energy 
and wit for self-support. It Is this basic Instinct which is 
outraged at every turn by the lack of good work for all ap- 
plicants, and of effective return therefor, which Is normal 
to our present Industrial system. Since the artificial social 
formula which we have Inherited states that, with a certain 



THE GROWTH OF DISSIPATION 301 

minor proportion of society at all times, only lack of work 
and Christian starvation is accorded to him who keeps 
within the law, whereas food, shelter, steam-heat and 
work, perhaps with liberty and perhaps without, are ac- 
corded to him who breaks it, it is most natural that many 
should choose the latter course and break the law, or one's 
own life, rather than to enter an almshouse — under what 
amounts to imprisonment for life, with incidental disgrace 
as keen as that of the jail. It is no wonder that our 
prisons are each year increasingly filled with voluntary 
" rounders," while the population of the almshouses re- 
mains stationary. 

In the second place, as a corroborative fact, it seems 
that the bulk of all paupers are found to have led a pre- 
vious life of a sort peculiarly productive, by purely 
physiological processes, of loss of initiative and self- 
respect. They had chosen a bodily conduct of life which 
had sapped it of its very foundations. In short, they were 
there because they had not left enough vigor of life or self- 
respect to commit either crime or suicide. Because it does 
take more life to follow the latter course, because the 
population of our prisons proves markedly more capable 
of development into something good than does that of 
our poorhouses, because even perverted, distorted life, or 
that put out of the way with decision, is better than the 
mere empty shell of it, it is encouraging to note that, how- 
ever crime and suicide may be on the increase, literal pau- 
perism is not. 

Finally, it is of hope to note that a thing so revolting 
to the instinct of self-respect as material charity, whether 
organized by the state or not, bears not the slightest sign 
of being a commensurate reply to the growing needs of the 
depressed classes. 

If attention be turned next to the history of crime, there 



302 THE COST OF COMPETITION 

again arises great question as to the proper interpretation 
of the statistics. The trouble is that the records are solely 
those of prisoners, whereas the legal definitions of just what 
sorts of action should place a man in prison have changed 
most markedly with the years. It is commonly urged 
that, although the records do show an Increase In our 
prison-population, yet the constant tendency to treat as 
crimes offenses which in previous times were regarded as 
too trival to warrant arrest, trial and Imprisonment, robs 
the fact of Its significance. This tendency undoubtedly 
exists. Yet it Is not to be forgotten that while fresh addi- 
tions that are constantly being made to the list of deeds re- 
garded as criminal, equally constant departure of offenses 
from the criminal code is occurring, through the repeal of 
obsolete laws and the lapse of others Into desuetude. In 
general, these two opposing tendencies may be stated as 
occurring: 

(a) To the multiplication of offenses and the severity 
of the penalties for crimes against the body, and 

(b) To the opposite course In regard to offenses against 
property. Thus, It Is only a few generations ago that a 
man might be hanged, according to good old EngHsh law, 
for stealing more than a shilling. Now mere peculation, to 
almost any amount, unless constituting kleptomania. Is not 
regarded as placing a man under more than temporary 
restraint and reform, nor as under extreme disgrace. At 
this same period of the past, however, no bodily assault 
was regarded as a crime unless It accomplished maiming 
such as would unfit the victim for fighting — that being 
then regarded as the chief business of life. A knock- 
down, for Instance, which removed the defendant's back- 
teeth (since front-teeth alone are of service In a fight) and 
left him unconscious for hours, could not cause the perpe- 
trator's imprisonment and so classify him among the 



THE GROWTH OF DISSIPATION 303 

criminals. To-day men are fined and imprisoned for tor- 
turing a rat ! 

It is not to be urged that these tendencies wholly coun- 
terbalance one another. The list of crimes is undoubt- 
edly lengthening. But they do counterbalance to a degree, 
and the balance is much aided by another tendency of the 
times which is very marked, viz. : that toward shorter or 
indeterminate sentences. All of our records of population 
In prison are taken on a certain day of the year or of the 
decade. Thus, it is plain, a community in which there had 
been two thousand commitments during the previous year, 
but for a sentence averaging six months each, would 
appear as having exactly the same criminality as another 
community which had made only one thousand commit- 
ments in the same period, but for an average sentence of 
one year. It Is unquestionable that the modern long list 
of minor offenses punishable with short or " reform " 
sentences does not necessarily keep In jail a greater average 
number of prisoners, In proportion to a given degree of 
turbulence, than in earlier times. There is therefore good 
basis for believing that our criminality-statistics constitute 
rough and fairly satisfactory. If not, accurate, records of 
the growth of true civil recalcitrance. 

These statistics reveal a steady Increase In criminality, 
occurring not only In all civilized lands, but most markedly 
In those which are regarded as leading all others in the 
progress of civilization. A most cursory examination of 
the authorities upon penology develops the practically 
unanimous belief In a continuous and rapid growth of 
crime, to an alarming extent. General Brinkerhoff, Presi- 
dent of the National Prison Congress of the United States, 
says : " The swell of crime has been continuous, like a tide 
that has no ebb." M. Augustin Delvlncourt, in his "La 
Lutte contre le Criminaiite dans les Temps modernes " 



504 THE COST OF COMPETITION 

(1897), says: "When one glances over the statistics of 
crime, * that vast measure of the conscience of the people,' 
one cannot but be frightened at the continuous and increas- 
ing growth of criminality. Unfortunately, the explanation 
is not to be found in the growth of population, as would to 
a certain point appear to be logical, but in the ever-greater 
number of impenitents, of revolters even, whom the 
French law calls 'repeaters' (les recidivistes) . The 
growth is such as would deny belief, were it not for the 
force of figures eloquent in their infallibility. The gen- 
eral statistics of criminal justice in France, from 1851 to 
1880, affirm that the average annual number of accused 
repeaters amounts to 48 per cent, and that of the arrested 
repeaters to 41 per cent. In i860 it has been shown that 
during a period of about thirty months, 34 per cent, of 
liberated prisoners were again brought to justice; in 1876 
this proportion had increased to 40 per cent., and in 1878 
to 45 per cent. ; in later years the figures are greater. The 
total number of sentenced repeaters, in the courts of assizes 
and correction, which was in 1885, 91,332, in 1888 had 
risen to 95,871, an increase of 7.5 per cent, in that short 
time; in 1892 the number had become 143,784."^* He 
also quotes figures showing that in Italy, in six years, the 
criminals per hundred thousand inhabitants rose from 
1070 to 1550. In Germany, in five years, the total num- 
ber rose from 350,000 to 430,000. 

Mr. W. D. Morrison, of Wandsworth Prison, Eng- 
land, in his " Crime and its Causes," says: " Most of the 
principal authorities in Europe and America are emphati- 
cally of opinion that crime is on the increase. In the 
United States we are told by Mr. D. A. Wells (in his 
' Recent Economic Changes' ) and by Mr. Howard 

14 This is an increase of 57! per cent, in seven years. Compare with 
Fig. 21 for the same years. 



THE GROWTH OF DISSIPATION 305 

Wires, an eminent specialist in criminal matters, that crime 
is steadily increasing, and it is increasing faster than the 
population. Nearly all the chief statisticians abroad tell 
the same tale with respect to the growth of crime upon the 
Continent. Dr. Mischler, of Vienna, and Professor von 
Liszt, of Marburg, draw a deplorable picture of the in- 
crease of crime in Germany. Professor von Liszt ^^ says 
that fifteen million persons have been convicted by the 
German criminal courts within the last ten years; and, ac- 
cording to him, the outlook for the future is somber to the 
last degree. In France the criminal problem is just as 
formidable and perplexing as it is in Germany. M. Henri 
Joly estimates that crime has increased in the former coun- 
try 133 per cent, within the past half century, and is still 
steadily rising." He then proceeds to enter empirically 
the question as to the possible connection between economic 
conditions and criminality. He observes, in the first place, 
that it is those countries which lead all others in the pro- 
duction of wealth, in commercialism, which experience 
the most crime. " The wealth of England is perhaps 
six times the wealth of Italy; but, notwithstanding this 
fact, more thefts are annually committed in England than 
in Italy. The wealth of France is extremely superior 
to the wealth of Ireland, both in quantity and in distribu- 
tion, but the population of France commits more offenses 
against property than the Irish. Spain is one of the poor- 
est countries in Europe; Scotland is one of the richest; 
but, side by side with this inequality of wealth, we see that 
the Scotch commit, per hundred thousand of population, 
almost four times as many thefts as the Spaniards." He 
concludes broadly from these facts that poverty is not a 
cause of crime; but in this his conclusions are broader than 
his facts. For, if poverty as it is commonly understood, 

15 Zeitschrift fur die gesarate Strafrechtswissenschaft, ix., 472. 



3o6 THE COST OF COMPETITION 

viz. : as a lack of material supplies for life, is a preventive 
of crime, crime should have decreased everywhere during 
the century, for then the .world grew immensely richer ; but 
this his own facts disprove. If poverty be redefined, how- 
ever, as meaning a comparative, rather than an absolute, 
lack of worldly things, as meaning disparity of wealth, 
then the situation becomes clear; for It is then the richest 
countries which contain the most, and the most intense, 
poverty. It is also the richest countries, and those most 
active commercially, which possess the most crime. 

To bring out this fact compare such countries as Spain, 
Italy, Turkey and the Balkan peninsula, on the one hand, 
with such countries as Germany, England, the United 
States, Australia, etc., on the other. The former possess 
much the more turbulent and violent population, impatient 
of all restraint, and yet suffering from the obvious lack of 
productive activity within their land. The latter are not 
only the most enlightened countries of the world, fairly 
worshiping the words peace and arbitration, built upon 
democratic principles, but they are the most phenomenally 
active In the production of wealth. According to all 
superficial reasoning, the former countries would be those 
where robbery was the rule of life and the latter would 
be those where property-rights would be held as sacred. 
As a matter of fact, in the former countries It Is common, 
in the country-districts, to find locks on the doors dispensed 
with entirely, and even In the cities crime against property 
is quite less than in the latter countries. For there, indeed, 
one's property Is commonly stolen from the aged and the 
helpless even when locked up In a bank vault; the robber 
had perhaps blown the safe, perhaps he had absconded, 
or perhaps he had merely " beared " some securities in 
Wall street. 

Mr. Morrison also reviews the question of crime In 



THE GROWTH OF DISSIPATION 307 

America In terms of native or foreign origin of population. 
He concludes, as has every other investigator whom I have 
consulted, that the foreign-born are less criminal than the 
American-born. For the popular belief in the " hordes 
of undesirable immigrants " as the explanation of our 
national criminal record there is absolutely no adequate 
foundation. 

Dr. A. C. Hall, in his " Crime in Its Relations to Social 
Progress" (1902), an exhaustive thesis from the statis- 
tical standpoint, quotes figures (page 282 and following) 
to show that crime has increased in England and Wales, 
in France, in Austria and in Italy, during the latter portion 
of the century recently closed, by various startling per- 
centages. On page 316 he says: "The German sta- 
tistics show far more crime In the city than in the 
country." He points out near by that the number of 
young people between the ages of twelve and eighteen 
employed In factories, per ten thousand, has increased from 
51 in 1885 to 66 In 1895. On page 329 he says: 
" Crime is essentially a social product, increasing with 
growth in knowledge, intellig.ence and social morality, 
along lines of greatest resistance to the new forces and 
forms of this social life." The italics are my own, In- 
serted because he mentioned every chief characteristic of 
modern growth in civilization except that of the competi- 
tive system for the determination of price. 

Mr. Roland P. Falkner, in his " Crime and the Cen- 
sus," ^^ takes up the argument that the criminal statistics 
do not tell the truth as to affairs, making them appear to 
be worse than they are. He corrects the totals by deduct- 
ing first for the " houses of correction " and secondly for 
the Southern States, In order to bring all to a homogeneous 

^^ American Academy of Political and Social Science publications, 
No. 190. 



3o8 THE COST OF COMPETITION 

basis. Final exclusion of prisoners not under sentence 
(although the proportion of them presumably guilty might 
be expected to remain constant) brings the growth of 
crime per unit of population between 1880 and 1890 down 
to 10.5 per cent. If this be the best that can be done by 
arguments in this direction, to prove that our proportion 
of criminality has been increasing at the rate of only 




Fig. 21. The Growth of Homicide and Hanging: Chicago Tri- 
bune s Statistics 



slightly over 10 per cent, per decade, the situation is bad 
enough to warrant the sober attention of the best patriot- 
ism which we have to offer. 

Governor Henry M. Boies, in his " Science of Pen- 
ology," gives countenance to a table of the growth of the 
country's homicides, hangings and lynchings for each of 
the years from 1882 to 1900, Inclusive, as culled from the 
daily press-reports by the Chicago Tribune, The results are 



THE GROWTH OF DISSIPATION 309 

displayed in Fig. 21. There 'the curve CCC gives the 
variation in number of homicides, the curve HHH the 
number of hangings and the line PP the contemporary 
growth of population. The row of points LL gives the 
number of lynchings, which is almost constant in compari- 
son with the enormous growth of the general volume of 
fatal violence of other sorts which is commonly over- 
looked. Here the contrast between the prosperous period 
of the middle eighties, when it was comparatively easy to 
obtain continuous employment, with the gradually ap- 
proaching period of economic depression which culminated 
in the panic of 1893 and departed only with the opening 
of the Spanish War, is too marked to permit escape from 
the impression that bodily violence is a symptom of eco- 
nomic pressure. The growth Is sevenfold. No minor 
error In the data, nor any smaller cause than this national 
one, can possibly be adequate to its explanation.^^ 

^'^ " The newspapers are now giving considerable space to the increase 
of crime in the large cities of the United States during the last few months," 
says the Literary Digest (September, 1904). "Chicago has been attract- 
ing attention by its daily chronicle of crime, and now New York is 
wrought up over an epidemic of murders, robberies, and hold-ups. Missis- 
sippi also comes forward with a murder record which, the Chicago 
Record-Herald says, ' indicates that life is about twice as safe in 
southern Italy as in that State.' ' The violence and indiiference to 
violence shown by our great cities, Chicago included,' says The Record- 
Herald, ' are symptomatic of a great and rapid change that is passing 
over the country. If the " Anglo-Saxon " respect for law and order is 
leaving us, it is high time to start a revival of it.' There have been 24 
murders, 68 robberies, 57 felonious assaults, and 253 burglaries in New 
York City within one month. Accounts of hold-ups and robberies have 
also become a conspicuous feature of the Chicago dailies. In Mississippi 
there were 569 known murders committed during the eight months ending 
September i, chiefly among the lower classes and negroes.' " Mr. Taft, 
Secretary of War, in his address before the Yale Law School (1905) 
quotes these figures in evidence of the recent growth of crime: 

1885. 1904. 

Murders 1,808 8,482 

Executions 108 116 



3IO THE COST OF COMPETITION 

In the light of all this evidence as to a worldwide rapid 
Increase of violence within recent years, the records of our 
own national census may be reviewed with some confidence, 
even if they do paint a picture which Is so black as to cause 
suspicion. Because, however, of the admitted tendency 
of the evolution of common law to reduce the number of 
prisoners on hand for a given degree of turbulence, and 
waiving, for the time, all right to claim that a decided 
diminution in the prison-population is the only thing which 
a civilized people has a right to expect, the plan has been 
adopted, in our quotation of these records, to assume that 
the criminality of 1850 was just twice what the records 
reveal, as measured in present standards. That is, we 
have Increased the record of crime for that year by 100 
per cent., that of i860 by 80 per cent., that of 1870 by 60 
per cent., that of 1880 by 40 per cent, and that of 1890 
by 20 per cent. That of 1900 remains yet to be inserted. 
In its true value, but at the time of writing had not yet be- 
come accessible. 

In exhibiting the national statistics for suicide there has 
seemed to be no reason for so distorting the figures. The 
reports of deaths and their causes are so carefully and 
accurately made, and always have been, that the most re- 
fined conscience could not demand any arbitrary coefficient 
of correction in terms of time. The same thing is true of 
deaths from all other causes. Of these the deaths due to 
heart-failure seemed to have a direct bearing upon the 
case, while those due to pneumonia possess an indirect one. 



His moral drawn from the stationary figures for executions — greater 
certainty and promptness of conviction — is excellent. So are the calls for 
the reform and expansion of police-forces in all the larger cities. But 
these remedies are all in the nature of partial cures or alleviations, not 
of preventives. The great lesson taught by the statistics is that the cause 
of all violence, whatever it may be, has expanded egregiously. That being 
so all cures come too late. 



THE GROWTH OF DISSIPATION 



311 



In Fig. 22, therefore, has been exhibited the parallel- 
ism between the growth of competitive economic dissipa- 
tion, on the one hand, and the growth of crime, suicide, 
heart-failure and pneumonia as revealed by the death- 
reports, on the other. There has already been found 




Fig. 22. The Parallel Growth of Economic Dissipation, Crime, 
Pneumonia, Heart-disease and Suicide 

ample basis for regarding the former as a cause of evil; 
there is similar basis for expecting these latter phenomena 
to be the sorts of evil which would be its fruit. 

In Fig. 22, the curve AAA is that of Fig. 15 modified 



312 THE COST OF COMPETITION 

in scale to fit the present diagram. The curve DDD 
measures the proportion of the sohd black of Fig. 12 to the 
clear white. These two dotted curves offer, therefore, 
our best available measures of the certain growth of eco- 
nomic dissipation by barter in proportion to the general 
mass of productive activity. Although drawn from quite 
different sources and based upon quite different assump- 
tions, it is seen that they agree very closely — particularly 
since the absolute scale of altitudes means nothing in this 
diagram ; it is the relative increase which tells the whole 
story. 

Generally parallel with these dotted curves are four 
full-line curves. The curve CCC shows the growth of 
crime In the United States since 1850, upon the assump- 
tion that the actual growth has been at only one-half the 
rate of that revealed by the census-statistics. 

The curve SSS exhibits the growth of suicide in the 
same time, in proportion to a fixed number of deaths from 
all other causes. That is to say, not only has the death- 
rate from all causes for the entire nation remained almost 
constant during these five decades, but even what slight 
variations in it have actually occurred are here eliminated 
from the showing. This curve .shows the increasing 
chance which a man runs, when his life-span shall have 
finally run out, of dying from suicide rather than from any 
other cause. ^^ 

Similarly, the curve HHH shows the increasing pro- 
portion of deaths due to heart-failure, the one disease 
most likely to reveal promptly any increase in intensity of 

18 The growth of suicide in England, although not so rapid as in 
America, as might be expected from the less rapid and intense growth of 
commercialism there, is, nevertheless, steady and alarmingly rapid. During 
the four decades following i86o it grew to io8, 131, 177 and 218 per cent, 
of what it had been, respectively, whereas in the United States it grew to 
no, 159, 198 and 230 per cent., respectively. 



THE GROWTH OF DISSIPATION 313 

competiton. That is to say, the effect of Increased com- 
petitive pressure would reveal itself among the losers in 
the increased number of suicides, while among the win- 
ners it would bring about an increased death-rate from 
heart-failure upon the competitive battle-field, with the 
bequest of successful colors to posterity as the only 
consolation.^^ 

One of the few diseases which Is sufficiently general to 
make its statistics significant and safe, and at the same 
time sufficiently dependent upon good shelter, good food 
and moderate exertion to make It an indirect index of the 
fruits of competition, Is pneumonia. The curve PPP of 
Fig. 22 shows its growth in proportion to all other dis- 
eases during the same five decades, a growth of about 
threefold. This Is not so bad as the nearly fourfold 
growth of suicide, nor anything like the almost sevenfold 
growth of heart-failure, but It Is bad enough. When It 
Is recalled that the usual fluctuations in the various causes 
of disease seldom are revealed by a fluctuation In the death- 
rate of more than a few per cent., — the recent epidemic of 
spotted fever, for Instance, not being even visible therein — 
It Is evident that some pretty stalwart force, of national 
proportions, must be Invoked In order to explain these 
growths In special death-rates of three, four and seven 
hundred per cent. 

19 The New York daily press for June 14, 1905, contains the follow- 
ing: "An alarming increase in deaths from heiart-disease presented by 
last week's mortuary statement has led to a comparison of data, which 
shows that since i868 the annual death-rate here from heart-failure and 
Bright's disease has grown from 13.05 to 29.62 per 10,000 population. 
This increase is considered alarming by authorities on the subject, and 
is emphasized by the fact that 125 persons died last week from organic 
heart-disease, when the rate the corresponding week in 1904 was only 56. 

" Strain of business and the cares attendant on fierce competition in the 
financial center of the city, and the worry attendant upon the anxiety 
to gain wealth, are given as an explanation by physicians. To put their 
explanation briefly, they declare the figures now prove beyond doubt that 
residents of New York are leading too rapid lives. Some of them say 



314 THE COST OF COMPETITION 

It might naturally be expected that tuberculosis, so sensi- 
tive to overwork and malnutrition, would be the one best 
possible index of the growth of economic pressure. So it 
would be had it been left alone. But tuberculosis stands 
almost at the head of all diseases as to its absolute death- 
rate. It claims an enormous list of victims each year. 
On the other hand, it is especially open to prevention. 
The causes and manner of its contagion are thoroughly 
understood by the medical profession. Therefore, it has 
been possible and most desirable to alleviate it. For 
decades the physicians and the government have labored 
toward its extinction, with all manner of means aimed 
particularly at it. No other disease has had anything 
like the attention paid to it as has tuberculosis, excepting 
possibly small-pox. The fruits of this are seen in the 
statistics. From 1850 to 1870 the proportion of deaths 
due to this cause rose by 37 per cent. During the thirty 
years which followed, by 1900, this proportion had fallen 
almost to where it was in 1850. In other words, all that 
the combined skill, energy and devotion of the medical 
profession, the boards of health and the state governments 
have been able to do, with all their special hospitals, 
improved public water-supplies and sanitation, domestic 
inspection and education of public opinion, has been to 

one person in a hundred examined has organic heart-trouble, and the other 
99 stomach-affections, the latter being due to rapid eating." 

The rate of increase of death from heart-disease in New York and 
Brooklyn, per thousand deaths from all causes, during the decade of 
1880-90 was twenty per cent. During the decade of 189071900 it rose 
by thirty-six per cent. more. Since 1900 the growth has apparently con- 
tinued at a still more alarming rate. 

The Chicago Tribune, which keeps careful records of many classes of 
abnormal happenings, calls attention to the increasing frequency of suicides 
of young persons. Suicides in general are increasing in the country at 
an extraordinary rate. In 1902, it says, the suicides of women were three 
times as many as in 1901, and the ratio of increase continues. Its list of 
current suicides of young persons between ten and twenty years of age is 
harrowing. 



THE GROWTH OF DISSIPATION 315 

reduce the death-rate from tuberculosis not quite to the 
position which it held under the primitive conditions exist- 
ing in 1850. Their strenuous efforts for good have been 
able to not quite counterbalance the evil tendencies of the 
competitive system in this direction. 

If, in the lack of figures as to the proportion of criminal 
life in the community from the census of 1900, an estimate 
were cast for that year from the general form and trend 
of the curve CC of Fig. 21, it is plain that the curve CCC 
of Fig. 22 must again cross the. curve SSS during the 
decade of 1 890-1900 and end at some point nearer to A 
than to S. However that may be, the remarkable coin- 
cidence in general rate of increase, during an entire half- 
century, of the volume of commercial competition and 
economic dissipation of Value on the one hand, and of the 
amount of crime and suicide on the other, is exceedingly 
impressive. Taken by itself it would constitute to the 
dullest mind a plain hint as to where to look for the ex- 
planation and cure of criminality. Taken in connection 
with our previous deductive analysis of general principles, 
based upon the law of the conservation of energy, to the 
conclusion that a state of affairs just such as is here revealed 
must naturally be expected to exist, there seems to be no 
possible escape from the conviction that criminality and 
suicide are very largely, if not wholly, the fruit of com- 
mercial competition: of an abstract, artificial institution 
as alterable by man as are any of his institutions, by educa- 
tion, argument and agreement, and not at all the fruit 
of individual moral degeneracy throughout the race. 



XI 
SUPPLY AND DEMAND 

UP to this point all deductions have been based upon 
fundamental considerations affecting society as a 
whole. This is justified as the only method of 
procedure in any scientific investigation sure not to lead 
one astray. With the conclusions thus based, no consid- 
eration of details may raise a question; if the details appear 
to conflict therewith, it is certain sign that there is error 
either in their definition or their observation. In order, 
however, to furnish to the technical reader a further in- 
sight into the operation of the fundamental energies 
referred to above, and to attain some accurate ground for 
future prediction, excursion will be made into the details 
of economic science to the extent of studying the action 
of supply and demand. For the non-technical reader, this 
matter is the best in the book for skipping; but if treated 
in this way some later deductions which are based upon 
it must not be questioned. 

The multitude of minor economic phenomena which are 
included broadly by these terms. Supply and Demand, 
together constitute the detailed action of the horizontal 
current of circulation portrayed in Fig. 8. The starting- 
point of the cycle of energy-transformations making up 
that current is usually taken to be Demand, the demand of 
the ultimate consumer. In the purely economic sense, de- 
mand is the sole director of all industry; although it is 
not, as is often stated, the sole instigator to productive 

316 



Supply and demand 317 

effort. By starting with demand as a known quantity and 
working from it backward to the forces by which wealth 
of various sorts has been prepared for its gratification, a 
rational understanding may be had of the forces by which 
we see directed the detailed activities of daily industry. 

All phenomena occurring in the processes of supply and 
demand must be measured in valuation. The funda- 
mental field of social energetics, In which human life and 
its economic equivalent. Value, were the elementary quan- 
tities from which alone safe deduction might be made, Is 
now disposed of. We are now considering, in the equa- 
tion of supply and demand, the transmission of those 
energies throughout the body economic; and, as was 
pointed out on page 153, they must be translated into valu- 
ation before that transmission is possible. The quantity 
of valuation attached to any commodity during this trans- 
mission is known as Its price^ a term more fully defined on 
page 73. It is the medium of communication whereby 
different portions of the body economic get Into touch with 
each other. 

Elementary Economic Interaction. The produc- 
tion by an Individual, in obedience to his own desires, of 
wealth for his own consumption is not an economic or 
social phenomenon; it is a biologic one. On the other 
hand, so soon as two or more individuals take part in the 
transaction there arises a question of the relation between 
individuals. Such a relation between two individuals Is 
the simplest possible element of economic society and gives 
rise to the elementary economic phenomenon: Exchange. 

Elementary Economic Force. In the days before 
exchange existed, when each man supplied by his own 
labor all of his own and his family's needs, the stimulus 
to productive effort would have consisted of desire, an in- 



3i8 THE COST OF COMPETITION 

tangible, psychologic factor which has hitherto defied exact 
measurement. But with the advent of exchange, which is 
the primordial economic phenomenon, the primordial eco- 
nomic force became tangible and measurable, and is now 
known as Price. 

Thus, to illustrate, the stimulus offered to the activities 
of the prehistoric fisherman by his hunger for fish was a 
practically immeasurable thing, modern discoveries In 
psychometry notwithstanding. Nor could the desire be 
measured by the resultant activity, because a lazy man must 
feel much more hunger than an energetic one before the 
same activity would become visible. Still less did the 
quantity of fish caught and eaten measure the hunger, be- 
cause the skill and luck of the fisherman here enter as addi- 
tional unknown factors. But the stimulus offered to the 
fisherman's activities by a hunter*s hunger for fish, desired 
as a variation from his ordinary diet of game, is no longer 
measurable by the hunter's hunger, nor by the fisherman's 
energy, skill or avarice, but by the amount of game rela- 
tively to fish upon which they can agree to base an ex- 
change. This ratio, or price, no longer depends upon any 
attempt at or necessity for absolute determination or ex- 
pression of the psychic forces upon either side. It is 
merely an equation between the two, a purely relative 
thing. Like a mathematical equation, It may have one, a 
dozen, an infinite or an unknown number of roots; all of 
the values upon either side may be unknown; yet, entirely 
regardless of this fact, if the equation be true, upon it may 
be built the most complex and valuable deductions. As 
a matter of fact, upon It is based all modern commerce, 
although the absolute value of the many forces relatively 
equated therein, — the absolute psychic desire, need or pain 
back of any economic negotiation, — is to-day, and may 
ever remain, wholly unknown and immeasurable quantities. 



SUPPLY AND DEMAND 319 

The Two Dimensions of Economic Energy. The 

equation resultant from such negotiation, or price, is the 
primordial economic force. But force is not of Itself a 
measure of energy. The factor of extent of energy must 
also appear.^ The extent of economic energy is evidenced 
by the amount of commodities which can be Influenced at 
the price prevalent. But this amount is not visible In the 
price alone, nor has price any essential connection with it. 
In any given limited market there Is, of course, a relation 
between price and quantity of exchange. But until the 
market is defined knowledge as to price gives no idea as to 
quantity. Thus, a very low price offered for wheat might 
easily influence a larger exchange in Chicago than a very 
much higher price would do in Athens; not necessarily 
because higher prices rule in Athens, but because Chicago 
Is the center of a very much larger wheat-producing and 
wheat-purchasing population. 

The extent of the economic energy of any given market 
cannot be known so long as the energy of supply or demand 
remains latent or potential in character. It must find 
kinetic expression in exchange before It becomes visible 
and measurable. Then the extent of the economic energy 
involved Is revealed in the amount of commodities ex- 
changed under the Influence of -the price offered and 
accepted. The multiplication of price by the amount of 
goods exchanged can alone give a measure of the quantity 
of business done, or. In other words, of the economic 
energy released. In scientific language, the total inte- 
grated dynamic effect of price active In exchange of com- 
modities, as contrasted with price passive in a market 

1 For an elaboration of the Ideas of intensity and extent of energy, see the 
author's " Thermodynamics of Heat-engines," Chapter I. He plans to 
publish shortly an improved and extended statement of the idea, as being 
one of the fundamentals of all the natural sciences. 



320 THE COST OF COMPETITION 

where no trading takes place, is known as Demand, or 
Purchasing-Power, 

To summarize and define : Economic Energy exists in 
two forms, as do all other sorts of energy, viz. : Potential 
and kinetic. 

The potential or latent form of economic energy Is 
demand, or purchasing-power. It is definable as a form 
of energy, because it possesses the power of overcoming 
resistance — the resistance to production or exchange. It 
must be a potential form of economic energy, because it is 
completely latent and imperceptible to the social sense ex- 
cept when and as it converts itself into its corresponding 
kinetic form of social economic energy, exchange. More- 
over, it can be stored Indefinitely, as to time. 

Correspondingly, the kinetic form of economic energy 
is Exchange, or supply and demand become visibly active 
In an equalization of price-pressure. 

Economic energy, like all other forms of energy, " Is 
made up of two factors, its intensity and its extent. The 
factor of intensity Is price. The factor of extent is the 
quantity of goods handled. 

It is plain that price is the factor of Intensity, for the 
transformation of demand from potential to kinetic, from 
demand latent in a non-purchasing population to demand 
active in exchange, always occurs when there is present a 
favorable difference In price, and never when there Is an 
unfavorable one. Exchange never takes place when the 
buyer's price is lower than the seller's.^ 

It Is plain that goods constitute the factor of extent, for 

2 Nor even when they are exactly equal. Of course, the visible price of 
exchange is always the same for both parties. But before exchange can 
take place the buyer's real price — that is, the maximum price which he is 
willing to pay — must be at least somewhat higher than the visible price ; the 
seller's must similarly be slightly lower. Neither party reveals his real 
price, but it is there, nevertheless. 



SUPPLY AND DEMAND 321 

they are always measured, more or less accurately, in terms 
of their mass; and mass is always the factor of extent, 
in any form of energy. 

Natural energy-transformations vary in their dimensions 
throughout the widest scope, producing to the human per- 
ceptions the most diverse aspect, according as the dimen- 
sion of intensity or that of extent be the predominating 
one. The rise of the tide, the fall of Niagara and the 
glory of a meteorite appear very differently to the human 
senses; yet they may be the display of exactly equal quan- 
tities of energy under very different dimensions. Years 
of quiet growth of a green willow tree and the firing of a 
13-inch gun are very dissimilar phenomena; yet they in- 
volve and exhibit identical quantities of chemical and ther- 
mal energy. The sale of a railroad for ten millions and 
the nation's daily transactions in milk may be identical in 
amount of economic energy involved; but the dimensions 
of price and extent involved in the two transactions are 
so very dissimilar that it seems difficult to trace anything in 
common. 

It must be remembered, too, that energy-transforma- 
tions are not really caused by the usual visible originator 
of the phenomenon. An old woman with a cow and a 
candle may start a conflagration which wipes out a city; a 
boy's toy-pistol may detonate a hundredweight of dyna- 
mite. The energy visible in the result is not to be traced 
to the accident of environment which set it free, but to the 
store of latent potentiality, accumulated at some preced- 
ing period, which transforms itself into that result. The 
blame for the burning of the city does not rest with the 
old woman, but with the architecture of the preceding 
generation. The boy with the toy-pistol is not held ac- 
countable for the explosion of the dynamite, but rather the 



322 THE COST OF COMPETITION 

person who left It unprotected. Similarly, in economics, a 
'drop of a few points on an insignificant stock may break 
the market and cause a panic. The tax on a pound of 
tea may incite a revolution. In neither case is the visible 
or apparent cause of the result the real, commensurate or 
rational one. This last must be looked for in the earlier 
accumulation of potentiality beyond the safety-point, 
awaiting only the proper conditions to set Itself free In 
its destructive or constructive task. 

Demand. It Is obvious that a very high price may 
prevail In regard to a certain commodity and yet there be 
very little demand for it, partly from the very fact of the 
high price and partly from purely external natural causes. 
This Is the case, for Instance, with iridium, or with amber- 
gris. Or the public may desire, be willing to pay for and, 
Indeed, may insist on having, a certain article to a tremen- 
dous extent, and yet the price may be very low. This, for 
Instance, Is the case with water. In each case the 
economic demand for the article, the industry set on foot 
and supported by Its pressure. Is comparatively slight. In 
the first case physical or biologic demand Is almost nil; 
in the second case It Is very great. But the quantity of 
economic demand may be the same in both cases. In the 
latter case the low price and the wide extent of demand 
are due almost entirely to natural causes — the plentiful 
distribution of water over the earth's surface and its great 
need, comfort and convenience in human life. In the 
former case the limited extent of demand may or may not 
be due to the difficulty of procuring the commodity In 
question. Iridium appears to have a very limited utility 
In the arts; but what width of application might be dis- 
covered or developed if a lower price once made it widely 
available cannot be safely predicted. In general It may 



SUPPLY AND DEMAND 



323 



be said that there is no broad natural law of interdepend- 
ence, as of cause and effect, between price and extent of 
demand. Either factor may take the initiative in influenc- 
ing the other. 

But, on the other hand, for any one commodity or 
group of commodities, in a given community and within 
a properly limited period of time, there is a fixed mutual 
relation between the two. 




Fig. 23. The Curve of Demand 

This relation may be represented graphically in a field 
of rectilinear coordinates, such as Fig. 23, in which the 
abscissas represent extent and the ordinates price of de- 
mand. In such a field the locus of demand will take 
approximately the form of an equilateral hyperbola, such 
as DD, asymptotic to the two axes. If m^, Wg and m^ 
represent three different stages of a market when the 



324 THE COST OF COMPETITION 

prices Op^, Op2 and Ops prevail, respectively, the extent 
of demand at each stage will be given by Oe^, Oe^ and 
0^3. The potential economic energy represented by the 
market at each stage, respectively, would be measured by 
the areas Op^m^e^, 0/>2^2^2 ^^^ Op^mge^. 

The argument by which this proposition is supported 
is largely one of limits. It is obvious in the first place, 
from general observation, that within the limits of a given 
community and of a given stage of development of the 
arts, price is a function of extent of demand, or vice versa, 
and a continuous function. This function is not neces- 
sarily the same for all individual communities. It is not 
necessarily the same for any one commodity for all time. 
Factors physical, political and ethical may, and undoubt- 
edly do, vary this function with time. But so far as 
purely economic forces are concerned, the forces which 
depend solely upon the commercial relation of man to 
man, price and extent of demand undoubtedly preserve a 
continuous mutual function which is, comparatively speak- 
ing, a very stable affair. 

Since the relation between increase of price and increase 
of extent of demand is always an inverse one, that is, the 
higher price always coinciding with the more restricted 
demand and the lower price with the greater demand, the 
locus of their coincidence must be convex toward the 
origin. 

Since either factor must pass to infinity in order to 
reduce the other to zero, this locus must be asymptotic to 
the zero-axis of each factor. 

It is no negative to this last proposition to say that cer- 
tain commodities sometimes fall in market-price to zero, 
as does city-water sometimes, for instance, while the extent 
of demand still remains finite. The visible price of city- 
water, in cents charged and collected per thousand gallons 



SUPPLY AND DEMAND 325 

used, Is often arbitrarily declared to be zero. The 
absolute price remains a finite, positive quantity, percep- 
tible in the tax-rate, and in the pressure exerted by the 
water-department to restrict leakage and wanton waste. 
Another such instance Is that of fresh air, which is not 
represented as an expense to the community even In the 
tax-rate. Yet it is an undoubted economic factor In the 
rental-value of office-buildings, etc. It is so necessary to 
human existence and It is so difficult to obtain that It Is 
now presented, to those who are artifically prevented 
from Imbibing It with natural freedom, at the rate of so 
many dollars per head, through the medium of the fresh- 
air funds. 

Nor Is It a sufficient negative to show that for a given 
population the consumption of a certain commodity often 
reaches a maximum of surfeit, as might be the case with 
apples, for instance, which would never be exceeded, no 
matter how low the price might become. In the first 
place, although the price of apples at the point of produc- 
tion often reaches a practical zero to the farmer, the price 
to a large number of possible consumers never drops 
below a certain minimum of quite appreciable size. In 
other words, the curve stops before any evidence Is to be 
had as to its extreme coordinates. Again, the price may 
fall after the extent has reached Its maximum; but if so, it 
shows the operation of forces other than those of ex^ 
change, working for a general scaling down of price- 
levels. 

The same is true of a maximum of price and a minimum 
of extent of demand. There seems to be almost no price 
which may be asked for a commodity which Is so high that 

some few individuals will not be found willing to pay it 

often those of the sort who are attracted solely by the 
high price. Except for cases of psychological affection 



326 THE COST OF COMPETITION 

for some Individual article on the part of some Individual 
possessor, It Is Impossible to conceive price being forced 
so high as to produce a zero-extent of exchange. When 
some Individual owner does this he merely proves his 
departure from the market-price, and not that the market- 
price has varied from the law stated above to one In which 
the curve could reach the zero-axis of extent. 

The final determining consideration of the form of the 
demand-curve is based upon the fact that, for any one 
given time or place, the purchasing-power of the pubhc Is 
sensibly constant. It may be a vibratory constant, some- 
times greater, sometimes less, to a slight degree. It may 
be a slow variable with time. It undoubtedly varies with 
locality. But for any one community and limited period 
of time the average total Income, or that portion of it 
which It feels free to expend for current consumption 
remains fixed. 

This simple fact Is one of the fundamentals of eco- 
nomic argument. It must be perceived that It Is a rigid 
fact. It must be perceived that while, as just recognized, 
the purchasing-power of a people may vary. It not only 
varies slowly, but it varies only at the behest of mighty 
forces. Nature may supply such forces. Favorable 
weather, producing extra crops, facilitating transporta- 
tion, modifying the cost of living may do it. But such 
forces are purely temporary, gone with the season, and 
produce only temporary results. Their average effect Is 
necessarily zero, for we have as many bad seasons as good. 
Moreover, their effect is nearly always local. 

Human institutions may supply such forces. War, 
taxation, tariffs and their opposites, commercial legisla- 
tion of any sort. In fact; religious beliefs and prejudices, 
social customs, race and caste limitations — these all 
undoubtedly affect the purchasing-power of a people. But 



SUPPLY AND DEMAND 327 

all of such forces except the legislative ones are Immov- 
able, beyond the control of the deliberate individual will; 
and as to the legislative ones, there the relation between 
cause and effect is so obscure, there is so little public 
knowledge of and confidence in what slight science of 
social dynamics now exists, that the result is as vagarious, 
as surprising, and is accepted with as general a feeling of 
resignation or of unreasoning indignation as are those of 
climatic irregularities. 

So, when all is said, it remains that the purchasing- 
power of a community is always either its producing- 
power or something less than that; and in virtual effect, 
for any one commercial division of the globe, under any 
given set of laws, for any one period of time not so short 
as to include only one change of season nor so long as to 
cover great evolutionary developments, the purchasing- 
power of the people is constant. 

Translating this into geometric language, the total 
amount of exchange, given by multiplying price by extent, 
must remain sensibly constant. It is measured graphically 
by the areas of the rectangles Op^m^e, etc., of Fig. 23. 
If those rectangles be all equal, the curve DD is an equi- 
lateral hyperbola. 

Supply. The subjective source to which demand 
appeals for its supply of energy Is supply. Except for 
supply, the consumer might range his demand up and 
down the entire gamut of price and extent, yet no 
exchange would result. It is therefore necessary to 
establish the general form of the curve giving the relation 
between price and extent of supply, as has just been done 
for demand. 

The first step in this process is to note that, while with 
demand the relation between price and extent Is Inverse, 
in the case of supply it is direct. That Is, the extent of 



328 THE COST OF COMPETITION 

the supply of a commodity usually increases with increas- 
ing price and decreases with decreasing price. This must 
indicate a curve departing simultaneously from both axes 
and passing across the axis of price at a certain distance 
above the origin. For, in order to instigate even the 
slightest amount of production, there must be some appre- 
ciable price offered. Very often this price is a perfectly 
definite, actual affair, even when there is no production at 
all. Such is the case with contracts for special work, 
where a price is made upon the specifications before pro- 
duction is entered upon, or is even expected with certainty. 
The same is true of subscriptions taken for works which 
will be produced if sufficient subscriptions are offered. 

For all small variations in the extent of supply the price 
is constant; that is, the supply-curve is a straight hori- 
zontal line. If the supply of considerably increasing 
quantities of a given commodity, however, involving the 
employment of increasing numbers of men, be undertaken 
in a given establishment under given methods of produc- 
tion, the Law of Decreasing Returns applies. The price 
will increase with the extent of supply and the apparently 
straight horizontal supply-line will rise as it passes to the 
right. Such is the situation when the fluctuations in 
extent of demand are prompt, temporary or violent. 

If the increase in supply of a commodity occur slowly 
enough, however, it permits alteration and development 
of both the supplies of raw material and the methods of 
manufacture; machines can be designed for carrying on 
processes formerly performed by hand; men can be trained 
into specialization upon smaller and smaller subdivisions 
of the work. Under such conditions the Law of Increas- 
ing Returns applies and the supply-curve will fall as it 
passes to the right. Such is alv/ays the form assumed by 
the supply-curve in conjunction with the lapse of time. 



SUPPLY AND DEMAND 



329 



Because the increase of goods produced always maintains 
a higher rate than the Increase In number of workers, how- 
ever, the curve Is a comparatively flat one, dropping very 
slowly as It proceeds to the rlght.^ 

Because the balance between these two processes for 
the Increase of output: multiplication of men and of 
methods, respectively, will be different in each commodity 




Fig. 24. Demand and Supply Curves, and the Market 

considered, for present purposes they will be considered 
as balancing each other, thus making of the supply-curve 
a straight line (to which It must approximate in any 
event). Such curves are shown at JS,, JSo, etc., in 
Fig. 24. 

3 The degree to which each individual laborer may respond with in- 
creased activity to an increased price for his product is a purely biologic 



330 THE COST OF COMPETITION 

The progress of events always tends to cheapen all of 
the accessory costs of production. Better supplies of 
raw material are developed; a fund of specially trained 
labor accumulates. Therefore the scale of cost for any 
given extent of production will tend to diminish slowly. 
Such a progress of events Is shown by the vectoral swing 
of the supply-curve about Its origin, as from ASi to AS 2, 
then to JSs, etc., In Fig. 24. 

The energy of demand, once existent, finds expression 
at the lowest possible price. This Is the common phe- 
nomenon of the tendency to buy In the cheapest market. 
Therefore, the scale of the curve DD of Fig. 23 or Fig. 
24 having been determined, by the purchasing-power of 
the community In question, all that Intensity of individual 
desire can accomplish is to press downward and outward 
along the curve, toward the point of lowest price and 
greatest extent of exchange. Thus, If we suppose all 
the factors In the production and exchange of a given com- 
modity to be constant, except that the methods of pro- 
duction advance with time, we shall have the state of 
affairs shown in Fig. 24. Here let AS^ be the supply- 
curve of a recently Invented commodity, when methods 
are crude, and AS2 and AS^ be the same curve In later 
periods, when more perfected methods have been evolved 

phenomenon; moreover, the extent to which it appears as a factor in in- 
creased production is insignificant, if not zero, so long as his efforts are 
confined to a single commodity. That is to say, he is himself then subject 
to the law of decreasing returns. For a limited time and to a limited ex- 
tent he may be spurred by higher income to produce above his natural 
average productivity; but, sooner or later, by natural gravitation, he must 
drop back into the rate determined by his racial and inherited character- 
istics. , This is clearly shown in the history of the piece-work system of 
wages. If the increased price for his labor take the form of shorter 
hours, permitting greater variety in the daily life and a higher general 
scale of living, his quality of productivity will respond thereto very 
promptly. But in the ordinary fluctuations of the volume of demand and 
supply this process cannot enter. 



SUPPLY AND DEMAND 331 

by experience and invention. Then, if the demand-curve 
DD remain constant during this period, that is, if neither 
the population alters nor the popular fancy for the com- 
modity be stimulated or depressed by external educational 
agency, the market will advance progressively from m^ 
to ^2 and then on to m^, etc. At first the price will be 
Opi and the extent of purchase Oe^ ; later the price will 
fall to Op2, and finally to Op^, while the extent of con- 
sumption correspondingly advances to Oe^ and to Oe^. 

In the first period of production of the article the 
curve OiSi rises very steeply because both the sources of 
raw material and the supplies of labor skilled in this par- 
ticular service have not yet been developed. Increasing 
demands for the article develop marked difficulty in pro- 
portionately increasing the supply to meet them. In con- 
sequence, only a very small proportion of the population 
can afford to pay the high price p^ which is necessary in 
order to induce the production of even the small amount 
e^. But the high price soon attracts to the new industry 
additional skill and energy, new supplies of raw material 
are found and In time labor becomes more widely skilled 
in this direction. In consequence, the difficulties which 
resulted In the production of increased quantities only at 
exaggerated cost are mitigated, and the angle of Inclina- 
tion AS^ to OE must sink to a less abrupt one, as at AS^y 
and finally to a position, such as AS^, which may be 
regarded as a final and stable one.^ 

4 It must be noted that the curve DD of Fig. 24 does not represent quite the 
same phenomenon as that of Fig. 33 ; hence, its equation is not necessarily 
the same, although its general form is. Fig. 33 presented the demand-curve 
for an entire community, covering all commodities purchased. For such 
total purchases the capacity of the community is fixed. Fig. 34 presents 
a demand-curve for a single commodity. The portion of the community's 
purchasing-power which finds expression therein is variable. Therefore, it 
cannot be an equilateral hyperbola. Yet the argument which gives to all 



332 THE COST OF COMPETITION 

Market-Equilibrium. In this gravitational rota- 
tion of AS about A the final position of stability is deter- 
mined by equilibrium between the forces producing rota- 
tion and the resistance encountered. The motive force is 
the tendency to purchase at lower prices, a purely vertical 
force on the diagram. The resistance consists of the 
natural inertia of the human race to changes of method 
and amount of production and of ignorance as to how 
to extend them, a purely horizontal force on the diagram. 
The two are exhibited in the demand-and-supply-curves, 
respectively. Their relation in the actual market at any 
time is exhibited in the intersection of the two curves. 
The sharper this angle the greater is the mechanical 
advantage of the resistance over the motive power and 
the less the tendency of the market to move toward a 
greater extent of exchange in order to attain a given 
decrease in price by increasing the scale of production. 

This action may be well illustrated by imagining AS 
to represent a bar hinged against the wall at A and sup- 
ported, at the point of intersection with Z)Z), by a cross- 
bar resting freely upon that curve. It is plain that the 
bar, if originally in the position AS^^ would fall down, by 
rotating to the right about A, until the friction of the 
sliding of the cross-bar between the two curves at m was 
sufficient to stop it. Equilibrium being thus reached at 
the point Wg, mechanics would call the angle S^m.D the 
angle of friction of the particular surfaces involved. In 

demand-curves the hyperbolic form applies also to Fig. 24. There the 
equation of DD can be stated only in the form 

PE'' = a constant. 

Because, as time advances, the purchasing-power accorded to any novel 
commodity usually increases, the areas of the rectangles Omi, Oniz, etc., 
must be progressively greater. In which case the value of x must be 
greater than unity. 



SUPPLY AND DEMAND 333 

such a case the motive force would be the vertical one of 
gravitation, as it is of price in Fig. 24. The resistance 
would be the almost horizontal one of friction upon the 
two surfaces mS and mD, as it is in Fig. 24 the purely 
horizontal one of human reluctance to increased extent 
of production. Therefore, the conclusion which has been 
drawn is no trick of chosen scales of drawing. It depends 
solely upon the general statement that the natural gravita- 
tion will take place until the resistance possesses a marked 
mechanical advantage over the motive force; that is to 
say, until the quantity of output which must be added to 
the prevailing rate in order to effect a given drop in price 
becomes too great to be worth the trouble. Moreover, 
since this advantage is steadily increasing, both in the 
economic original and in the mechanical simile, the situa- 
tion is shown to be one of stable equilibrium. No further 
motion can ensue. 

Summary. To summarize what has been proven: 

( 1 ) The demand curves are hyperboloidal in form ; 

(2) When applied to the community as a whole, cover- 
ing all commodities, the hyperbolas are equilateral; 

(3) For any one commodity, under fixed conditions 
of public taste and varying conditions of supply, these 
hyperbolas have exponential values (for the factor of 
extent) greater than unity; 

(4) For any one commodity the gravitational forces 
acting upon the market tend always downward and to the 
right; 

(5) This gravitation brings the curves of supply and 
demand into intersection at sharper and sharper angles, 
whereby the market is brought ever into more and more 
stable equilibrium, the variations in extent of exchange 
growing ever greater and greater in proportion to given 
variations in price. 



334 THE COST OF COMPETITION 

Current economic history gives dally Illustrations of 
the processes depicted In the preceding diagrams and 
leading to the above conclusions. The growth of scien- 
tific knowledge and Its Increasing application to the arts 
bring forth an unending series of novel commodities, 
Invaluable In their possibilities for the growth of the 
human race. As each appears It takes Its stand In the nii 
locality, hard to get, high In price and enjoyed by only a 
few. As time elapses It begins Its gravitational journey 
downward and to the right. All social forces of an edu- 
cational and elevating character are expressed by a rota- 
tive fall of the supply-curves toward the right. Those 
natural tendencies In the human organism which become 
visible as a love of learning, of discovery, of Invention, of 
efficiency of effort, must always make for the production 
of larger and larger quantities of goods upon a more and 
more systematic and efficient scale. The love of power, 
which leads man to organize his fellow-workers Into a 
compact, harmonious, obedient and efficient body beneath 
his control; the love of adventure, which leads him Into 
unknown regions and conditions; the love of creative 
Invention, which has ever kept his head full of wheels In 
spite of every discouragement In the shape of poverty 
which the world has been able to heap upon the Inventor; 
the love of knowledge, of absolute, natural truth: all of 
these, which we are no nearer to understanding after all 
our analyses, must find expression In the rotation of the 
supply-curves, In these diagrams, about their origin down- 
wards and to the right. 

The Normal Relationship Between Drop in Price 
and Response in Extent of Exchange. This prop- 
osition that alteration In market-price produces much 
more than proportionate alteration In the extent of con- 
sumption Is a very Important one and constitutes the chief 



SUPPLY AND DEMAND 335 

guide in prediction as to what will occur in the future. 
Stated in more popular language, it is to the effect that if 
the price of beans, for instance, should fall by 10 per cent., 
the consumption of beans would increase, not by 10 per 
cent., nor by any figure similar to that, but by 25 
or 40 per cent., or by some other figure proportionately 
very much greater than 10 per cent. If, as is quite 
imaginable, the public is already eating all the beans that 
it can, then the increase in the extent of its purchases will 
appear in an increased consumption of other commodi- 
ties, and almost always of those indicating a higher grade 
of life than was before available. 

The Distortion and Suppression of the Natural 
Law of Supply and Demand. This law holds true, 
however, under 'the limitation of one condition, which 
applies equally to all the laws of supply and demand: 
The commodities in question must he those actually con- 
sumed by the purchasers. Demand coming from such 
consumers is an integration of the natural psychic forces 
of the million. Demand coming from buyers in whole- 
sale markets, on the other hand, whether of goods or of 
securities, or from buyers of articles used for production 
instead of for consumption, is a resultant of forces which 
are intellectual rather than psychic, which are artificial 
rather than natural. Thus, a purchaser of bar-iron to be 
worked up into a special form of bolt is influenced by far 
different considerations than by the average rate of actual 
consumption of such bolts, which would be the natural 
indicator of the proper rate of production. He keeps his 
eye upon the market in a purely intellectual fashion, buy- 
ing when bar-iron is low or labor is cheap or strikes are 
unlikely or the money-market is easy or when his debtors 
pay up — and all of these factors are much more artificial 



33^ THE COST OF COMPETITION 

and more subject to human control than is now readily 
believed to be so. 

Or again, the manager of a street-railway does not 
purchase street-cars because he has a taste in that direction, 
because he likes to spend his time riding in them, or because 
he imagines himself a connoisseur fit to form a collection 
of rare, artistic or scientific specimens of street-car con- 
struction. Neither does he buy them because other people 
would like to ride in them; if he did, he would buy many 
more than he does, and much more comfortable ones. 
He buys because he has a taste for dividends, not street- 
cars, and because his intellect tells him that in order to 
acquire dividends he must take into consideration the 
public comfort to some certain degree. But the real con- 
sideration which directs his choice is the* need for that 
sort and number of cars which, when run upon his par- 
ticular tracks by his particular motive power and under 
the particular grade of public opinion with which he has 
to contend, will return the maximum net profit per dollar 
of investment. 

This is his sole aim, if he be a good business-man. 
To accuse him of any more altruistic attitude would be 
not only to egregiously stretch one's faith in human 
nature, but it would question his right to his position. 
He receives his pay, in the form of dividends as well as 
salary, for doing just this thing, and he does it. Just so 
far as serving the public aids in this, or even so far as he 
may be able to serve the public without interference with 
it, he does so; but the other comes first and is the guiding 
factor in the situation. The universal readiness of bus- 
iness-directors to restrict output when it will increase prof- 
its is prima facie evidence of this. The universal policy 
of " charging all the traffic will bear," which every bus- 
iness-man follows under another name, is just this and 



SUPPLY AND DEMAND 337 

nothing else. It consists in the wise restriction of service, 
to the exaltation of prices, until the net profits reach a 
maximum; without, of course, overdoing the matter so 
as to kill the business. Such a policy Is very different, the 
exact opposite, In fact, from a true policy of seeking to 
give the maximum service which will pay natural expenses. 
In the face of such considerations as these It were most 
inaccurate to regard the production of street-cars as 
obedient to the public demand for urban transportation, 
except In a purely secondary. Incidental and fractional 
way. For the demand for transportation cannot be 
addressed to those who furnish transportation: the con- 
ductors, motormen, car-builders, engineers and superin- 
tendents. Neither the people's money nor the people's 
voice Is permitted to penetrate to their Influence. The 
people may be willing to pay more for a given grade of 
service or they may demand to be charged less ; they can- 
not say this, either literally or in effect, to the men with 
whom they are really trading, those listed above. They 
must address the president of the road, they must pay 
their money to him; and he is not the representative of 
the motormen and car-builders. He Is the representative 
of the stockholders, whose Interests are wholly antag- 
onistic to theirs. Neither the public nor the motormen 
have any representative, except that the latter have their 
labor-leaders, flouted by the public and unrecognized by 
law, — as if It were in the least businesslike for a set of men, 
whether of stockholders, motormen or riding pubHc, to 
attempt to do business with the others without the offices 
of a single legal representative head, through which all 
communications may pass, and whose word possesses 
authority. So between the Demand of the public, ex- 
pressed in the money they pay, and the Supply maintained 
by the railway workers, measured by what they are paid, 



338 THE COST OF COMPETITION 

stands the official of the corporation, representing neither 
Supply nor Demand, neither running the cars (his super- 
intendent does that) nor paying for It (the public does 
that) , but the representative of a third party, the stock- 
holders, who are quite extraneous to either Demand or 
Supply, not demanding transportation at all, demanding 
only dividends, and not supplying anything at all, but 
rather Idly absorbing all they can get. 

Wherefore it must be plainly evident that the process 
of Supply and Demand, so frequently referred to as the 
sovereign guidance of the economic world, — ^whlch. In- 
deed, it should be, — has now almost no opportunity what- 
ever for full or accurate operation. By the presence of 
Barter both factors to It are egregiously Interfered with 
and repressed. Supply is unnaturally stunted, because it 
receives in return only a small fraction of its natural pro- 
ductivity, only a small fraction of what Demand actually 
pays, and because Competition draws away from it Into 
Its own ranks all of the best and ablest men. Demand Is 
unnaturally stunted because it can find expression only to 
the amount of the nation's purchasing-power. Instead of 
to the amount of Its much greater producing power. 
Both processes are not only stunted, they are very much 
dulled as to sensitiveness and accuracy, by the Impossi- 
bility of direct appeal from the Consumer, who exerts 
Demand, to the Producer, who conducts Supply. The 
first must address his persuasive eloquence of cash, and 
the second must advertise his need of inducement, both 
to a third, intermediary party, the Barterer, whose prime 
interest it is artificially made to be to prevent the passage 
of the communication: not to let Supply perceive how 
much is paid for the service supplied, not to let Demand 
perceive for what a small fraction of what is paid Supply 
is content to supply. 



SUPPLY AND DEMAND 339 

Supply and Demand Freed from the Brake. 

The results to the community as a whole from this sad 
lack In our system of internal communication has already 
been portrayed in the preceding chapters, for which en- 
trance into these details was not necessary. They become 
of interest only when attempt is made to imagine the 
future fruit of the possible abolition of barter. In such 
a case the surest guide to foresight as to what will happen 
comes from a study of the extent and the manner in which 
Supply and Demand will be freed for their natural union, 
so prolific of material prosperity for the community as a 
whole. 

If we turn back to Fig. 24, and to the Summary of 
our conclusions (page 333) in regard to the general 
characteristic of the interaction between Demand and 
Supply, and consider the market-condition mo. It must be 
quickly evident what will be the general effect of the 
abolition of barter: a wide and rapid expansion of the 
extent of trade. 

Up to this moment we have considered, among the 
forces which were causing this market to gravitate down- 
ward In price and outward In extent, only those operative 
In the productive department, the steady decrease In cost 
due to Increasing intelligence and efficiency among the 
workmen, to improved methods of organization within 
the shop and to enlarged scale of production. These 
three fields of growth have already been subject, for 
many years, to as active an improvement as has appeared 
to be possible. Everything which could be said or done. 
In the wide and active discussion of the technical problems 
of shop-management and cost of work, In our professional 
conventions of mechanical engineers, in our technical 
periodicals and engineering book-press, and even in our 
college class-rooms, to Improve every opportunity visible 



340 THE COST OF COMPETITION 

In these three directions has been said and done. One of 
our most common bases for national pride consists In the 
contemplation of the world-supreme efficiency which has 
been already accomplished along these lines. 

Therefore It is only na.tural to assume, as a safe con- 
clusion, that the gaps in productive efficiency yet to be 
filled out are comparatively small and obscure. To say 
that we have reached the limit of progress therein would 
be absurd; but at the same time It Is certain that we can 
proceed further only as the slow change of environment 
permits, only as the independent advance of scientific 
attainment in the material arts, the general average of 
public Intelligence and the steady Increase of population, 
proceed. These growths are necessarily slow and steady. 
The mass Involved is too great to permit hope of any sud- 
den or marked acceleration. 

The Indirect stimulation to rapid expansion which all of 
these phenomena will experience from the possible abolition 
of barter in the future, will be fully discussed in the second 
portion of this work. But that Is not now our text. At 
present It Is the direct expansion of trade due to the lower- 
ing of market-prices by the abolition of barter. Here lies 
open before us an opportunity to cut down all market- 
prices, at one fell blow, by some seventy to seventy-five 
per cent. Without awaiting any resultant increase In pro- 
ductivity or purchasing power the volume of trade would 
Increase fourfold. 

This line of advance has not hitherto been recognized 
and developed, either with assiduity or to a degree, 
as have the purely productive lines. Indeed, Its direction 
has witnessed a backward rather than a forward move- 
ment, and a powerful one at that. It has already been 
pointed out at length how rapidly the cost of barter per 
capita has increased during recent decades. It has been 



SUPPLY AND DEMAND 341 

shown repeatedly how its relative growth, In comparison 
with that of productivity, has always been the maximum 
compatible with their arithmetic difference remaining a 
minimum positive quantity. That is to say, what prog- 
ress the point lUg has hitherto made down the demand- 
curve has been due to the difference only, between the 
positive advance of productive efficiency within both the 
shop-organization and the individual producer, on the one 
hand, and the negative advance of increasing cost, of both 
organization and Individual within the office, on the 
other. (See Fig. 12a, page 257.) 

That this difference has finally come, of recent years, 
to be a negative quantity itself, — that the general average 
of prices has risen rather than fallen, — there are many 
ready to assert. It may be so. Certainly there are some 
palpable grounds for such a belief in the current market- 
reports. Certainly there is nothing in our analysis to 
deny Its possibility, as a recent and temporary institution. 
Permanently, It is Impossible, of course; It is against the 
law of gravitation of Intensities, as well the conserva- 
tion of quantities, of energy. But temporarily there may 
occur, as periodically In history there has occurred, a back- 
ing up of the natural flow of economic life, a momentary 
localization of intensity of energy, to the accumulation 
of an economic pressure which must find ultimate vent 
in economic revolution; with an incidental burst of eco- 
nomic conditions down to, and usually violently beyond, the 
level which they would otherwise have attained in con- 
tinuous freedom of action. 

Therefore it must be plain that there now lies before 
us, in the prospective breaking of this toppling dam, the 
release of a torrential flood of economic activity over- 
whelming In Its comparison with anything which has 
hitherto been witnessed in our comparatively even eco- 



342 THE COST OF COMPETITION 

nomic progress. It has always been so with the release of 
economic energy by political changes; they have always 
stimulated economic activity as economic forces never can. 
We can all of us well remember the outbreak of the 
Spanish War, for instance: the slowly gathering period of 
depression which preceded it; culminating, it is true, late 
in 1893, more than four years before the war itself, but 
continuing fairly steadily thereafter, we having become 
accustomed to it rather than overcome it ; and the magnifi- 
cent burst of economic activity which followed the suc- 
cess of that war. And yet, if we were to trace down and 
measure the magnitude of the alterations in demand (the 
increment of purchasing-power released by the govern- 
ment's war-expenditures) or In the altered faith in our- 
selves which aroused the nation from its supine lethargy, 
— if we should compare these economic and ethical magni- 
tudes with those now under discussion — we should find 
them utterly insignificant. 

Once, for instance, during an Investigation of the price 
of gas in the city of Cincinnati, it was testified by a gentle- 
man well known throughout the State and possessing sub- 
stantial interests in gas-properties, during examination 
under oath, that If he should ever become acquainted with 
any improvement in the art of making gas which, beyond 
all doubt, would reduce the cost of manufacture by five 
cents per thousand cubic feet, he would pay a million dol- 
lars for It without the slightest hesitation. This was his 
estimate, not of the total value of such an Improvement to 
the community, but of the portion of it which he might 
expect, easily and without any question, to reserve to him- 
self. What was the entire value to the community? What 
would have been that value had the reduction in selling- 
price been seventy per cent, instead of five cents, and ap- 
plying to all industries instead of to a single minor one? 



SUPPLY AND DEMAND 343 

It is only necessary to imagine, in Fig. 24, the rotation 
of the supply-curve about the origin to the right until the 
point m^, sliding out upon the demand-ourve, has fallen 
to a point seventy per cent, nearer to the horizontal axis 
than It is now. That will suggest to the mind the degree 
and rate of expansion of trade necessarily resultant from 
the legal abolition of barter. 

And it is the extent of trade which feeds the body poli- 
tic, not the price. It is the number of material loaves of 
bread, gallons of milk and tons of meat which count. No 
one except the barterers over them cares how little they 
may cost. It is true that, In a natural state of affairs, 
where price could be taken as a true measure of value for 
life-support instead of chiefly a measure of inflated valua- 
tion, it would be the product of extent by price which would 
measure the economic energy transformed into biologic, 
as already stated. But in the lack of that condition it Is 
proper to state that the biologic energy present is Indi- 
cated chiefly only by the extent of goods handled. 

There has been some indication of this expansive rela- 
tion between price-depression and growth of extent of 
trade already in the history of economics. The difliculty 
in observing it accurately lies In the requirements, first, 
that the drop In price m.ust be so sudden as to debar 
extraneous factors from obscuring the results, — just as, 
In thermodynamics, I.t Is only explosive expansion which 
reveals a reasonably true adiabatic, — and secondly, that 
the price and commodity affected must be one appealing 
directly to popular consumption. One such Instance 
occurred when the Austrian Government, in the adoption 
of the " zone system " of railroad fares, incidentally 
dropped the average rate of fare over quite a wide net- 
work of roads by some forty per cent. Within fifteen 
months, according to the reports, the traffic increased by 



344 THE COST OF COMPETITION 

several hundred per cent. That Is to say, instead of the 
ratio of increase being one hundred divided by sixty, or 
five-thirds, as would have been the case were there a fixed 
volume of purchasing-power which could increase the 
extent of Its purchases only In Inverse proportion to the 
price. It was several full fold, indicating a marked increase 
in purchasing-power. That all of this Increase In purchas- 
ing-power came from the Increased circulation of the com- 
munity cannot be proven. But it Is altogether likely, and 
its obverse Is equally unlikely. 

There are other similar Instances, chiefly In the postal 
service. Indeed, the original plan for penny postage in 
England was strenuously opposed in Parliament for the 
reason, among others, that the London post-office would 
not be able to handle the resultant enormous volume of 
traffic ! It would be surprising If a similar argument were 
not urged against the present proposition, — probably by 
those who are urging at the same time that if we shut 
down upon all the barter In the land there will be nothing 
for the discharged barterers and their clerks to do ! But 
none of these single Instances can be regarded as proofs. 
Foreign factors insist upon entering the investigation. The 
only safe guide, as In all other scientific observation, Is a 
careful and repeated analysis of the situation, to the elim- 
ination of the foreign factors by mutual cancellation. 

It may be said, In reply to all of this, that this seventy 
per cent, prospective drop In prices has not yet been and 
cannot be accomplished. If so, that reverts the argument 
to page one. It is at any rate a great deal to have 
accomplished the admission of the fact that the seventy 
per cent, or more is there awaiting our grasp. When one 
glances over the vast field of current strenuous discussion 
of shop-costs, glorifying every little casual advance, offer- 



SUPPLY AND DEMAND 345 

Ing millions for a gain of five per cent, in a single industry, 
and with each additional five per cent, growing harder 
and harder to get, like a mine getting deeper and deeper, 
— in the face of all this the establishment of the fact that 
here lies an untouched seventy per cent, open to public 
occupation, must be considered a satisfactory accomplish- 
ment for this First Part, for this bare analysis of Economic 
Cost. In the Second Part, concerning itself with the ethics 
of the case and with what may be reasonably expected to 
occur should the saving of the seventy per cent., or even 
any fair portion of it, be actually accomplished, argument 
will ultimately be resumed at this point.^ The preceding 
analysis of the trend of economic events In the past will 
then be made the basis for a prediction of their natural 
trend in the future. 

In deference to a widely prevalent suspicion, however, 
that neither sentiment, moral principle nor even Intellectual 
prediction may wisely be relied upon as a guide in public 
action. It has been deemed best to draw at this point as 
sharp a line as possible between fact and theory. What 
precedes this division of the work is Fact, a half-century 
of fact accomplished by the nation's past activity and 
graven Into her history and her destiny beyond human 
question or recall. If its aspect seem novel it Is solely 
because its portraiture has been drawn along lines of force 
which have hitherto been overlooked, but which have been 
none the less existent and active. The lesson for present 
and future conduct of public affairs which Is to be drawn 
therefrom Is here left to each individual reader, for choice 
accordingly as his individual conscience and reason may 
dictate. If he wishes a suggestion as to what must con- 
stitute rational conclusions In that direction, it will be found 
in the succeeding pages of the Second Part. But the main 

5 See page 530. 



346 THE COST OF COMPETITION 

object of the work: to reveal to each citizen the true eco- 
nomic nature of his own activities, of the relations which 
he maintains by law with his fellows and of their inevit- 
able effects upon the character and the destiny of the 
aggregation of human souls of which he is an inseparable 
and an essential part, has now been accomplished. In 
thus placing upon his shoulders the fullest liberty and re- 
sponsibility for a wise and safe decision therefrom must 
constitute the nation's sole trust for her future safety and 
happiness. The event thereof — national prosperity or 
poverty, honor or degradation, life or death even — " will 
lie in the hand of God." 



PART II 

The Ethical Cost of Competition and the Future 



"There exists in the economy and course of nature an indissoluble union 
between virtue and happiness, between duty and advantage, between the 
genuine maxims of an honest and magnanimous policy and the solid 
rewards of public prosperity and felicity." — Washington, 




C 

o 



o 
U 

H 






h 



PREFATORY 

IN the ensuing discussion of the ethical side of the com- 
petitive system it has been seen fit to make the 
approach by way of the economic side. It has been 
demonstrated in an exact way, from premises which were 
none too altruistic, that the presence of competition 
involves and entails certain economic conditions which are 
universally admitted to result In evil social and ethical 
conditions. In passing from the conclusion of such an 
economic argument Into purely ethical considerations the 
Inference might be drawn that It was the main lesson of 
the book that the former were to be considered as the 
foundation and the latter as the superstructure. Such, 
however, Is not the author's aim. 

Upon this point of priority, whether economics be the 
cause of ethics or ethics be the guide of economics, there 
is wide disagreement. There Is a certain minority school 
of writers and thinkers who undoubtedly attribute too 
great an essentiality to forces purely economic and 
too little to forces generally admitted to be purely 
ethical. 

This school includes the Marxian socialists, who are per- 
haps Its typical representatives. But It Is altogether prob- 
able that the great majority of the educated, though not 
professionally scientific, world makes its mistake In the 
opposite direction. It attributes too much power to the 
influences of religion, education and example upon the 

349 



350 THE COST OF COMPETITION 

individual and too little to the coercive effect of economic 
and institutional environment. 

Into this question it is not the author's present purpose 
to enter. The problem too much lacks in definition, the 
form in which it presents itself in each individual brain is 
too diverse, to permit its being definitely settled before the 
reading public and then used as an aid in further construc- 
tive thought. However, two general considerations must 
be pointed out before the ethical aspect of our existing 
industrial situation is laid before the reader, for his absorp- 
tion by whatever method of approach he pleases. One of 
these two considerations is addressed to each of the two 
aforementioned schools respectively. 

First, in considering the ethical effect of economic 
forces, care needs to be taken to realize the rigid certainty 
of those effects. The situations are so complex, there is 
such a multitude of forces and reactions entering into each 
of them, the relation between community-Interest and the 
individual presents such an indefinable mystery, that none 
but the skilled may hope to clearly and accurately trace 
the line between cause and effect. 

For this reason it would seem axiomatic that the first 
essential to preparation for the study of social ethics 
should consist in acquiring a thorough grasp of the fun- 
damental laws which define the relations between cause 
and effect, force and reaction, latent potentiality and 
visible activity. 

For instance, the study of mechanics, from Newton's 
elementary laws of motion to the latest developments of 
the science of energetics, must be absorbed and digested 
by the student before he can truly comprehend the 
activity of the locomotive engine. Why is It then that 
the study of that Inconceivably more complex but quite 
artificial machine, the body politic, which was built by 



PREFATORY 351 

and Is maintained for the same processes and purposes 
as the locomotive, namely, the transformation of energy, 
is attempted in our best universities without any such 
previous training? The student is given no thorough, 
fundamental grasp of natural law and of its manifesta- 
tion In cause and effect, by years of experimental study 
of the natural sciences. Instead, he Is first given, as his 
groundwork, no end of history. That Is good; the 
engineering student also gets his history of engineering. 
He Is next given his studies In form of government. The 
parallel In the engineering course Is the study of mechan- 
isms, a familiarization with the tools which have been 
devised in the past and are used more or less at present. 
The sociological pupil gets his science of statistics; that 
Is his sociological laboratory-training. The rest of his 
course is much the same: a further accumulation of facts 
and data, as raw material. 

From this training the average man comes Inevitably 
to regard the social structure as Mr. Spencer regards It: 
as a question of statics. He looks upon It much as an 
Intelligent South Sea islander might look upon a loco- 
motive standing dead and cold upon a sidetrack: as a 
beautiful and complex structure, worthy of exhaustive 
and analytical observation, but viewed with no concep- 
tion whatever of Its real purpose, of Its tremendous 
potentiality for speed and power when once given life 
by fire; of Its possibilities for creative good when wisely 
guided, of Its inevitable destructlveness of self and others 
when carelessly or Ignorantly driven. 

To obtain this insight the student needs long training 
In the principles of mechanics and energetics. He must 
not be so entirely lacking as at present is the case in the 
fundamental conceptions of mass and velocity, of force 
and distance, of motion and of energy, of the potentiality 



352 THE COST OF COMPETITION 

for motion of the latent forms of energy, of the source 
and of the destination alike of all visible activity. 

It IS a widespread lack of these conceptions which 
makes the argument from economics to ethics so danger- 
ous in sociological work. But to those who would 
follow it, regardlessly, elementary preparation to the 
extent of the following two points must be insisted 
upon: 

First. — That when a force acts upon a body it pro- 
duces the same Invariable effect, In the way of visible 
motion, no matter how many other forces may be acting 
upon It at the same time. Thus, few people have 
escaped, in their high-school study of physics, the fact 
that a ball fired from a horizontal gun drops to the earth 
as quickly as if It were dropped from the hand; but few 
also have grasped the fact that the same law, expressed 
In the same mathematical formulae, also gives the motion 
of the ball, under the two combined forces, when the 
muzzle Is aimed vertically upwards or In any other 
direction. 

The application of this simile to sociology lies In the 
fact that the resultant of competitive economic forces is 
always downwards. There may be many other forces 
driving upwards, downwards or horizontally. Heredity, 
education, religion, patriotism, emulation, domestic 
affection or, most Important of all, the as yet undefined 
force of natural physical growth, are all operative and 
effective In upward directions. But this fact concerns 
not at all our main proposition, which Is : That whether 
the presence or the lack of any or all of these forces be 
impelling an Individual In what direction you please. If 
it be once established that the force of economic com- 
petition trends downwardly, that individual, because of 
its presence, will rise more slowly and not so far if ris- 



PREFATORY 353 

ing, he will fall more rapidly and Irretrievably if already 
falling, or will start into degeneration if otherwise tend- 
ing to be stationary. 

Second. — ^^That potential energy Is always invisible. 
It needs only a suggestion to point out that the engineer 
who, lacking a proper gauge, should await the explosion 
of his boiler to determine whether the pressure within It 
were rising would thereby prove himself utterly incom- 
petent. Yet the great bulk of men of not only business 
and science, but even of politics, when regarding ques- 
tions of economics and politics, await with the utmost 
complaisance the daily newspaper's report of what has 
happened in order to know what Is going to happen. 
They will buy five such sheets daily. Yet, when a 
Fashoda incident arises they say confidently, "Warl*' 
and proceed to sell securities. When a Cuban-Spanish 
war-cloud bursts, after a generation of steady gathering 
to one inevitable end, they call it a bolt from the blue. 
The ability to predict, the first test of all scientific 
thought, appears to be totally lacking in the great 
majority of the country's prominent men of commerce, 
journalism and public ofiice. 

Indeed, this ability to predict political events Is not 
generally expected. Its absence Is not rebuked. The 
inability to gauge properly the invisible accumulation of 
ethical, political and economic potentiality in the com- 
mon people Is so widespread, even among Intelligent 
people, that the great public mistakes which are made 
for lack of It are charged against their doers not as faults 
of Intellectual training, but as errors of Innate judgment. 

With lacks such as these, to enter the ethical field 
from that of economics is also perilous. 

The second of the considerations referred to, which 



354 THE COST OF COMPETITION 

was to be addressed to the opposite school of thought, 
to the school which relies upon ethical forces as the sole 
propulsive guide of human affairs, is this : 

In drawing inferences as to ethical results from purely 
ethical premises alone, details must be excluded. We 
have no exact measure of ethical forces, as we have of 
mechanical ones, nor even approximate measures, as we 
have for economic forces. When the quantities involved 
are small the analyst may easily become deceived, not 
only as to their exact amount, but even as to their direc- 
tion, whether positive or negative. It is only when the 
ethical forces at play become, from their size, resolvable 
into general moral principles regarding which there can 
be no question, that the deductions to be drawn may be 
safe. 

This statement brings the discussion to the feet of 
those who are often styled the sentimentalists. There is 
no real need to defend the class to which the term is prop- 
erly applied; indeed, it rather deserves aid and coun- 
tenance. If the sentiment be false (or narrow, which is 
the same thing), not based upon the greatest good of 
the entire race, then the term is justly one of oppro- 
brium. But if the sentiment be wholesome, in the literal 
sense of the word, the discussion has now first found its 
truly stable foundation. 

A recent brief outline of the history of the past nine- 
teen hundred years, called forth by the close of the pre- 
ceding century, in which w^as recorded only secular 
events, closed with the terse paragraphic statement that 
in all those nineteen centuries of growth toward world- 
civilization, the one most potent guiding influence had 
been the teachings of Jesus of Nazareth. That this is 
true, that the present world-civilization is a Christian 
civilization, is unquestionable. It has been the coercive 



PREFATORY 355 

power of the ethical forces set in motion by Him who 
rebuked all violence, and who consistently refrained from 
its expression under the most extreme provocation, which 
has overcome the turbulence of the myriads. For this 
reason the ethical premises upon which the following 
analysis will be grounded are those to be found In the 
four gospels of the New Testament. 

Again, our naticJnal structure, from the town-meeting 
to the federal government, is based, both consciously and 
unconsciously, both fundamentally and imperfectly, upon 
the broad principle that all men, in their naturally 
organized relations with the community as a whole, are 
born " free and equal " ; and that any other relation of 
an opposite sort, whether organized or sporadic. Is 
unnatural and must stunt and distort the social ororanism 
and degenerate the naturally useful Individual Into a 
social sore. 

This principle of secular ethics will also be taken Into 
the premises. To those men who, albeit often able to 
read, write, publish and be read, are so limited in under- 
standing as to be unable to perceive the fundamental dif- 
ference between this doctrine of the equality of all men In 
the eye of the state and the absurd proposition that all 
men are alike, or even equivalent, my word at the outset 
is that they cannot possibly agree with what follows, nor 
even learn from it its lesson. But their quarrel Is not 
with my conclusions; it Is with my premises. The fact 
remains that all men are hy nature born free and equal: 
possessing freedom of initiative, and In their relation 
toward the Supreme Intelligence and toward the organ- 
ized state, equal. The natural, rapid and wholesome 
growth of our nation, In all things essential, is due to 
the foresight with which Its fathers founded it upon 
this fundamental natural fact. If it shall have developed 



356 THE COST OF COMPETITION 

later that any man is either hampered in his initiative or 
treated unequally from his fellows by his own community, 
it is plainly because man has artificially invaded and 
broken this fundamentally natural relation between indi- 
vidual and community. 

But the final test of all accuracy of deduction is by 
approach from more than one direction. The check thus 
established must stand as scientific proof. If a man study- 
ing a problem in taxation, for instance, finds his conclu- 
sions disagreeing with the first law of energetics, he may 
well hesitate. Either his data are erroneous or else his 
treatment of them is false. But if he finds that his purely 
statistical results are corroborated by the general laws of 
energetics which underlie all science, economic and politi- 
cal alike, he may feel reassured. If, finally, these double 
deductions are found to be in accord with the sense of 
moral truth which has been handed down by the experi- 
ence of the ages, the truth may be accepted as con- 
clusive. 

Thus, in the present case, the author feels that the 
condemnation of profit-seeking as inherently antagonistic 
to the principle of unselfishness, although here given a 
later place in the argument than was its condemnation 
as inherently inefficient, is sufficient for all purposes. It 
was sufficient for the writer himself, in his first grapple 
with the question, to convert him and to devote him for 
all time to its rebuke. To him all other analyses of the 
main question, all minor aspects of its details, all prog- 
ress in the other sciences, whether economic, biologic 
or material, have come as mere corroborations of his 
original conclusions, furnishing broader foundation and 
better definition; but they have not come as proofs. 

Further, the reference of the matter to the secular prin- 



PREFATORY 357 

ciples of equality and liberty, in his judgment, comes 
second to the above. The result must corroborate the 
first conclusion; as, in fact, it does. Justice and liberty 
are synonymous with unselfishness; but they are narrower 
principles, and the proof deduced from them is not so 
stable nor so permanent. 

The discussion in terms of economic premises, although 
here given first place and, because of its complexity, the 
greater space, should come third in the order of accep- 
tance. For economic considerations are overlaid by the 
principles of public justice, just as the latter are overlaid 
by moral instinct. A man will throw property-considera- 
tions to the winds, — every man will, sooner or later, — 
In the face of demands in the name of justice or liberty. 
He will forego both justice and liberty, In their legal 
sense, for the sake of moral conscience. 

The reference of the matter to statistical proof the 
writer regards as the last and the weakest method of all. 
His own statistical culllngs have been introduced purely 
as illustrations. The proof, based upon the law of the 
conservation of energy, that competition, from Its very 
definition, consists of waste, and that it must entail 
poverty and overwork in the form of the starvation-wage, 
and poverty and no work In the form of the submerged 
tenth, — that is the final word, from the economic stand- 
point. To make the statement concrete and to gain some 
Idea of magnitudes the curves and statistics were intro- 
duced. They were drawn neither skillfully nor exhaus- 
tively. But, supposing them to be in error, neither the 
skill of the specialist nor the patience of the devotee may 
ever hope to extract from statistical sources commensu- 
rate rebuttal to the proposition, proven alike from con- 
siderations of morality, justice and public economy, that 
competition, that mere profit-seeking itself, without any 



358 THE COST OF COMPETITION 

regard to whether the profit attained be exorbitant or 
moderate or nothing at all, is an inherently evil thing, an 
institution to be purged from our body politic by every 
effort, religious, educational or political, which the inge- 
nuity of the conscientious citizen may be able to devise or 
his strength and courage be able to exert. 



II 

THE ETHICAL NATURE OF BARTER 

IT is of the first importance, in understanding the 
inherent nature of barter, to recall that its origin 
dates back before the dawn of history. In man's 
progress upward from the brute level of existence it is 
difficult to say just what institution first differentiated him 
from the beasts. It cannot be domesticity, for many of 
the higher mammals exhibit forms of family-life of a far 
purer sort than those existent in the earlier stages of 
human development of which we have fairly exact record, 
when polygamy and polyandry were the accepted foun- 
dations of society. In fact, the perfectly developed monog- 
amous family is a human institution which has appeared 
at a comparatively late date in the evolution of the social 
organism. 

Nor can this first distinctive institution be gregarious- 
ness, the first community of interests consisting of the 
military tribe formed for the purposes of mutual defense; 
for many of the beasts also possess that. 

In the use of tools appears a clue as to man's first 
departure from a purely animal life. But there are 
undoubted instances of the use of material objects by birds 
and beasts, in the building of their nests and the capture 
of their prey, which come very closely to trespass upon 
this field as a prerogative belonging purely to man. More- 
over, the man and the tool in combination do not con- 
stitute an element of society. The use of tools is 

359 



36o THE COST OF COMPETITION 

undoubtedly the primitive Industrial phenomenon, and It 
is interesting to note that it extends back into brute exist- 
ence. But the primitive social economic phenomenon 
must have Included at least two individuals and have con- 
sisted of the relationship existent between them. This is 
discernible with certainty only when Exchange first makes 
its appearance. 

Here, indeed, seems to be the primordial social element. 
When two producers of value, whether tool-users or not, 
interchange their accumulations of wealth there arises for 
the first time those phenomena of Specialization and 
Coordination in Exchange which have since become mag- 
nified and complicated by mere reduplication until they 
now constitute all that we possess which can be defined 
as The State. 

So far as knowledge now extends, exchange was accom- 
panied from the first by barter. How far back Is the 
origin of both it is impossible to say, but certain it is that 
both are exceedingly primitive. In the beginning there 
must have been a very much greater proportion of barter 
visible In each retail transaction than there Is now. This 
Is still true of the oriental and other economically more 
primitive countries. For the modern occidental expan- 
sion of barter has taken the less visible form of Internal 
organization, and of complex and costly preparation of 
armament and position preliminary to the actual trial 
of strength between the parties to negotiation. In fact, 
barter and exchange could together come Into existence 
only when the brutal antagonism natural between all 
individuals in primitive existence first became so disarmed 
by Intelligence, acting perhaps through a species of police- 
force of public opinion or of enlightened despotism, as to 
eliminate extreme physical violence from the Intercourse 
between individuals. There must have been a more or 



THE ETHICAL NATURE OF BARTER 361 

less forced armistice, at least, between the negotiating 
parties. But between the degree of violence which 
characterizes the exchange as robbery, or, more mildly, 
as extortion, and that which permits it to be called pure 
barter there is absolutely no stable or distinct line to be 
drawn. All that is necessary, in order that barter may 
exist, is that the world shall stand by and see fair play. 
It does so, giving a fair field with no favor, for all the 
figurative kicks and blows between combatants which they 
care to give or take. There Is no other institution which 
in its history brings into such high light the Anglo-Saxon 
love of fair play in a square fight as does the attitude of 
the state toward barter, from the most primitive sort 
down to the commercialism of the present hour. The 
excessive brutalities of primitive passion, so far as they 
are visible in the actual negotiation, have of course been 
modified by the advance of public opinion, as have those 
of singlestick and boxing; they have also been somewhat 
modified by law. Direct physical violence between indi- 
viduals, involving visible Injury, mutilation or loss of 
life, is quite prohibited; but it is altogether an open ques- 
tion as to how successfully true cruelty and invisible man- 
slaughter has been eliminated thereby. 

There is no possibility of disguising the fact that barter 
Is nothing more than a balance of forces between the two 
contending parties. It is essential to a clear understand- 
ing of current economic action that this point be empha- 
sized. The two or more negotiating parties meet and 
oppose forces. The balance of force determines the price. 
Violence of muscle or brawn, or with warlike weapon, is 
of course excluded; but of violence of spirit, manifested in 
any way not illegal, or at least detectable, there is plenty. 
The violence of Intimidation, or even of actual injury or 
loss of life, if accomplished by the less visible weapons 



362 THE COST OF COMPETITION 

of legal economic advantage, may be used within the nego- 
tiation, directed apparently solely toward effect upon the 
price accepted though actually toward the welfare of the 
opposing Individual, without depriving the negotiation 
of the characteristics of legal barter. Violence of the 
cudgel and shot-gun order cannot be kept out of considera- 
tion, when once the other is permitted to enter. It will 
occur occasionally; on the part of labor, for instance, 
when the legally permitted oppression by means of 
organized barter and capitalism has driven Indignant 
human nature to reply with what means It possesses; Its 
utter futility having nothing to do with the naturalness of 
the outburst of repressed life. But this is not ordinarily 
considered a part, although In nature It Is so, of barter. 
But of what is universally admitted to be nothing else 
than barter, on the part of the highest in the land, a large 
portion Is unquestionable violence: of violence of the 
Pilate sort, a quiet disclaimer of responsibility which can- 
not be disclaimed, the violence of restriction of circula- 
tion and employment and purchasing-power by cost of 
barter, the violence of Indifference to the pressure upon 
others of life and death, of love and pain, of hunger and 
the lack of opportunity to work, of dire need in the face 
of extortionate prices. The daily newspapers reveal 
enough of it to turn the heart sick. Still more true Is It 
that the mere fear of violence, without the actuality, not 
only may be but nearly always Is an active factor in deter- 
mining the price, — which shows the narrow usefulness of 
laws against actual physical violence in such transactions. 
All this Is less true of barter for goods than It Is of bar- 
ter over the price of labor. In the barter over goods the 
pressure Is not nearly so evident, but It Is there neverthe- 
less; the competitive policy of "charging all the traffic 
will bear," when applied to the staple necessaries of life, 



THE ETHICAL NATURE OF BARTER 363 

means nothing less than putting up the price until the con- 
sequent decrease in the expansion of population, visible 
In decreasing purchases, warns the profit-seekers to put It 
no higher. The bargainers are unconscious of this fact, 
they are unaware that In watching the market-reports of 
the volume of trade In wheat and beef and Ice they are 
gauging the relative activities of the angels of Life and 
Death, but It Is true nevertheless. Every fluctuation In 
price of commodities, every variation In price or demand 
for labor, constitutes bodily violence. In the form of 
bodily discomfort, pain, want, the congestion of habitat 
until tuberculosis becomes epidemic, the reduction of diet 
and clothing until pneumonia Is rife, while malnutrition 
aids a whole series of other diseases to swell the list, of 
overwork until rheumatism claims those who do not turn 
Insane or criminal, of limited supply of milk and Ice In 
summer until the babies die like flies, of all sorts of 
physical suffering to the point of life and death, of moral 
suffering to the extreme that social degradation can 
express, — In all these forms barter can and does Include 
the worst Imaginable violence to humanity. It Is partly 
the dally familiarity of these phenomena and partly the 
difficulty of clearly tracing cause and effect in the com- 
plexity of the present economic system which alone shields 
them from that outburst of public Indignation against them 
Avhich would otherwise be Inevitable, and which saves the 
consciences of those active In promoting these conditions. 
It Is only natural and Inevitable that such violent 
anarchy as this In our economic system, — Its very founda- 
tion. In fact, upheld and defended by public opinion and 
the law, — should breed an even wider moral and intel- 
lectual anarchy in the Individual, In the shape of crime, 
Insanity, labor-tyranny, official corruption, prostitution 
and nihilism. It is an all too axiomatic fact that all of 



364 THE COST OF COMPETITION 

the anarchy which constitutes " the social question '^ of 
the day is due to the exercise by the stronger party to bar- 
ter of every sort of physical superiority over the weaker 
other than the purely muscular, — both that of personality 
and that of position. The cunning use of passive decep- 
tion, the more active pressure of fear of unemployment, 
the cold-blooded utilization of the stress of want combined 
with domestic affection: the marshaling upon one side of 
all the power that millions of capital can command 
against individual and often feminine powers of resist- 
ance upon the other, — all these are accepted accompani- 
ments of everyday bargaining. It is an unmitigated, 
though usually disguised, balance of pure force and 
endurance. There is no need to refer. In addition, to 
those less frequently revealed though well authenticated 
situations in which the most sacred Impulses of the human 
heart, — parental affection struggling with the temptations 
offered to child-labor, manly honor standing against 
bribery into disloyalty, and feminine chastity face to face 
with economic dependence and dire want, — are laid under 
stress in the cutting down of costs and the forcing of a 
good bargain. 

Of the Individual moral responsibility of those who 
engage In the great game of barter, of the weight of 
blame which should attach to their free activity In it, It Is 
not the purpose here to speak. Of men and motives we 
are not to be the self-constituted judges, but merely of 
institutions. For tremendous wrong-doing every man 
who upholds the competitive system is certainly respon- 
sible. Of the measure of guilt to be charged against him 
therefor let his God and the light which may have pene- 
trated his soul alone sit in sentence upon him. The great 
majority of employers, particularly those of moderate 



THE ETHICAL NATURE OF BARTER 365 

scale, are striving earnestly and unselfishly, although 
blindly and in vain, to mitigate for their employees the 
hard lot which fate has thrust upon them. I know this 
too well to have one syllable of bitter and unjust invective 
to send against them, as employers. But as citizens, 
voters, talkers, writers, as men who should not be afraid 
to stand for the forlorn hope which they believe to be 
right, a dire weight of denunciation might justly be 
launched against them for recusancy, — were they only a 
little wiser. As for those who see more clearly what they 
are doing, who are able to perceive how far and wide and 
deep, hydraulic fashion, spreads the pressure of a single 
keen bargain struck, until what nets Its originator a mere 
thousand, spent in a fortnight, lops oiff from a million con- 
sumers a tithe of their meager Income each, drops one 
more shuddering soul from the ranks of respectability 
Into The Submerged Tenth, — of these individuals and 
their consciences, when they continue in their barter and 
Its defense, it were as well not to speak. 

But of the Institution as a whole, for the perpetuation 
of which every citizen Is equally responsible, there is no 
reason for mincing phrases. There need not be the least 
hesitation in saying that, of all the things in our present 
civilization which can be included under a single name, 
for unmitigated wholesale cruelty of concept and for 
moral depravity of result, commercial competition stands 
out the unquestioned leader. 

If this statement be doubted, tell me what other can 
compare with It? Is it murder, or allied physical violence? 
How many victims does that reach in a year? Not one- 
tenth of one per cent, of those affected by barter. How 
far beyond itself, out of sight In the Intricacies of the 
social conformation, do the direct results of the Iniquity 
of murder extend? Scarcely at all. Finally, how much 



366 THE COST OF COMPETITION 

of It IS a mere symptom, a direct result, a natural fruit, 
of competitive activity? Almost all of It. 

Is It the prize-ring;, its nearest of kin? That cannot 
compare with It for brutality. In the prize-ring equality 
of opportunity and of doubt as to the issue is carefully 
preserved, so that both parties may enter the contest 
willingly, even joyfully. Marquis of Queensberry rules 
pit carefully man against man, pound of brawn against 
pound of muscle, each man restricted to contest within his 
proper class. Seconds, sponges and surgeons a.re at hand, 
and care is exercised that the loser gets no more " punish- 
ment " than is necessary. Only the principals get hurt, 
and ten days' time heals their wounds. The community 
loses in the operation only through Indirect, unmeasurable 
demoralization. 

But in commercial competition where are all these 
humane precautions against injustice and extreme injury? 
Where is the spirit of fairness which places upon the prin- 
cipal's the pain of their misdeeds and preserves to each 
an equal chance to win out? Where Is the spirit of m-an- 
liness which refuses to fight except one's opponent be one's 
equal. In sex, weight and years? There, Indeed, the 
fight is deliberately made as unfair as possible. Is carefully 
restricted to one between the powerful and the weak, 
between the " successful " and the " Improvident," — 
as between a corps of gladiators in* the arena, prudently 
provided with sword and shield, against a huddled mob 
of naked savages or of non-resistant Christians. On 
'Change, when railroads or steel or coal or beef or " the 
industrials " are bulled or beared, In the directors' offices, 
when combines, pools and agreements are effected, when 
prices are " established," when lock-outs are *' decreed " 
or production " regulated," by men in the prime of life, 
fed with five-dollar luncheons, backed by ample capital, 



THE ETHICAL NATURE OF BARTER 367 

the reactionary weight of the " piles " they make falls 
upon no trained coequals; not upon Individual opponents, 
sturdy men like themselves, but upon the helpless unamal- 
gamated millions, the muttering men without capital, 
the weeping women, the walling children. Here Is no 
free nobility of savage hunter versus savage fisherman, 
fighting It out In the untamed wilds; here Is unmitigated 
selfishness and cowardice, the shooting of robins from 
comfortable cover. 

There Is much sentiment abroad just now against the 
legal permission of prize-fighting. In these pages will be 
found no intimation that this sentiment Is not good, 
that there might not better be more of it. But in 
the name of all consistency, if we are going to condemn 
legalized brutality, as demoralizing to any extent, let us 
condemn all of it, beginning with the most flagrant and 
disastrous first. And certain I am that from the bald 
accounts of the brutal doings of the barterers which reach 
me in the daily press, — of the extortlan, the vulgar luxury 
and the false standards of the rich, of the turbulence, the 
suicides, the frenzy and the depression of both poor and 
rich which follow In its wake, the sensationalism of the 
manner of its reporting being itself but a part of it, — I 
can turn from the general to the sporting-page of my 
morning-paper and read an account of a clean, fair prize- 
fight, where two strong men stand face to face and pummel 
each other into Insensibility, — if, indeejd, the thing be not 
a money-making farce, degenerated from a real prize- 
fight into a barter over the gate-receipts, — with a positive 
sense of escape from the disgusting and the demoralizing 
into the inspiration of a just and virile. If brutal, freedom. 
How, In the face of considerations such as these, the 
organized moral teachers of the land, the clergy and the 
editorial press, can see their duty as otherwise directed 



368 THE COST OF COMPETITION 

than against this most stupendous of all violent frauds, 
Is not to be understood by those who have taken thought. 
If their enlightenment has not been accomplished by the 
pages which have preceded, there Is plenty more of evi- 
dence to offer them. By Its fruits the true nature of bar- 
ter can be known, If not by its anatomy. 



Ill 

THE COST TO THE LOSERS 

A T the first glance any attempt at a proper measure 
/--\ of the ethical cost of the competitive struggle 
JL JL to the classes which lose In the visible, economic 
sense, the classes of the starvation-wage and the sub- 
merged tenth, seems a hopeless one. It Is not alone that 
we have no yardstick for ethical losses or gains. It Is 
that the quantities are stupendous, unimaginable, to be 
appreciated by experience alone. Let one wander but 
briefly where these classes are to be found, not alone In 
the slums, where he who runs may read, but In the Institu- 
tional whirlpools Into which the flotsam of social turmoil 
is gathered a while before it disappears. Let one but 
glance into the almshouse, the prison, the hospital, the 
lunatic asylum and the morgue. What visible trace Is 
there of aught ethical except loss, of simple lack of ethical 
impulse or of understanding of what It may be, of mere 
bodily shell from which all moral life has long since been 
eaten out but which still carries the Imprint of God's like- 
ness until the final collapse. That Is sad work, discourag- 
ing to most observers. But It Is not the saddest; for there 
the struggle Is almost over. For a while life continues, 
turbulent or passive, as the chance organism may dictate; 
but the turbulence is not that of striving, the passivity is 
not that of peace. Mere bodily Instinct, of hunger, of 
resentment, of affection, remains, aping in phantom gro- 
tesqueness the remembrance of days when desire and con- 

369 



370 THE COST OF COMPETITION 

test and love and honor were real. That Is all. It is 
almost always repulsive, sometimes hideous; but it is 
seldom very painful. 

But look further and more closely, not where poverty 
openly flaunts its begging needs or cloaks its shame in con- 
gested numbers, but where it hides its stern reality under a 
brave exterior. Look at the unnumbered, unknown mil- 
lions fighting for life and pretending not; counting each 
ounce of strength and each penny of cash for its weight 
against, not always sheer hunger and cold, but against 
disease and domestic burden, against that deterioration 
which comes from monotony of existence, against child- 
hood's lack of opportunity or age's lack of comfort, 
against that loss of self-respect which comes from loss of 
good appearance and that proper pride in social position 
which the self-satisfied alternately appeal to for further 
stimulus for striving and condemn as extravagantly 
wasteful ! There is the pain ! There allot your 
sympathy ! It is not against the stunning violence of sud- 
den death that we need to pray, O Lord, nor against the 
comatose convulsions of virulent disease I It is for the 
long-drawn torture of life without growth, the hopeless 
leaden pain of sensibility not yet killed nor yet permitted 
wholesome outlet, of numberless days dragging into 
numberless weeks and months and years, each absolutely 
alike, each denied the ear-mark of little triumphs or even 
of signal failure, devoid alike of the happiness of love 
fed and of the pleasure of hate gratified. That is the 
life which is worse than the rack, which beggars Tantalus; 
and he (or she, for so many of them are women, whom 
the strong of the land ought to be proud of protecting) 
who walks its way without impatience of spirit, or 
sin, or crime, walks indeed with beautiful feet. They 
are the brave poor things who deserve the Victorian 



THE COST TO THE LOSERS 371 

cross. For it Is they who earn the true starvation- 
wage.^ 

Yet of some more concrete estimate of what they lack 
there Is some hope. A few helpful general considerations 
may be stated with exactness. 

In the first place, the problem is simple. The ethical 
condition of the losers in the race is measured by their 
material environment. The pressure from above which 
has forced them where they are has done two things : 

( 1 ) It has pressed them near the soil. The fripperies 
are gone. The solemn pretenses of high life find neither 
food nor room. Social etiquette is simple and transpar- 
ent. The essentials are laid bare. No long code of diplo- 
matic advance intervenes between the maiden and her 
lover, between the assailant and his victim. Deception 
is limited to sheer lying. Love, hate, devotion, sacrifice, 
sympathy, are what they pretend to be. Between the 
impulse and the deed lies neither the safeguard of delay 
nor the curtain of hypocrisy. Adult men and women are 
much as little children, merely of a larger growth. Life 
is natural and purely human. 

(2) It has pressed them into close contact with each 
other. They are promptly cognizant of each other's needs. 
They must attend to them, resisting by their close coordi- 
nation the external pressure to which they must inevitably 
succumb alone. The Indifference which is the natural 
characteristic of the so-called higher classes, who are 
artificially protected from attack, here finds no chance 
to survive. They nurse each other and bury each other 
and pay each other's debts. They visit each other in 

1 " Balzac, in * Pere Goriot,' refers to the ' dramas that go on and on.' 
Such are the tragedies of the unemployed, recurring with monotonous 
iteration during every period of industrial depression." (Mr. Percy Alden, 
in The Outlook for May i6, 1903. The entire article is worth reading.) 



372 THE COST OF COMPETITION 

prison. They adopt each other's children. They have 
to, or else drop into the submerged tenth, — which Is a 
longer, more horrid fall than from Fifth to Third 
Avenue. With them communism and altruism are basic 
instincts. The portion of their income which they devote 
to charity is In inverse proportion to its size. The time 
they spend on their neighbor's needs is In direct propor- 
tion to the length of the working-day. Their women 
bear large families, do the washing, keep house without 
maids, and yet find strength and time for a charity of 
spirit and deed which the ladies of leisure cannot parallel 
within their own class. Their children grow up naturally. 
In one sense, although fearfully stunted and distorted by 
lack of opportunity In another. They learn no false 
stories from hired maids, no artifices of correct deport- 
ment from polite boarding-schools, no habits of super- 
ficially skimming the appearances from the realities of 
life. They care for each other while mere tots. They 
learn to maintain their own from the start. Their play- 
ground is the crowded sidewalk. At three they must 
respect the rights of others or suffer; at ten manly and 
womanly ability is at a premium. They grow up into 
adult citizens who vote for the most stalwart candidate, 
according to the standards which have been allotted to 
them: for him who will give them what they most direly 
need, a job and an occasional picnic, — to the great indig- 
nation of those who have made money out of their child- 
hood's necessities, out of their food, shelter, coal, ice, 
fresh air and transportation to green fields. Only, so 
many of them, alas, do not grow up at all ! In the sum- 
mer Ice Is so high that the milk does not keep; in winter 
coal Is so high that pneumonia creeps In. 

In short, if the proportion of altruism to selfishness In 
a man, measured In terms of his physical environment of 



THE COST TO THE LOSERS 373 

food, shelter, opportunity and inspiration, the ratio of his 
actual altruism to that theoretically possible, be denoted 
as his " ethical efficiency," then it may be rigidly stated 
that 

The Average Ethical Efficiency in the various 
economic classes {of Fig. 11) is inversely proportional 
to the height of their economic level above submergence. 

It is plain that the ethical development of an individ- 
ual cannot possibly exceed his physical development. 
His ethical efficiency, like all other efficiencies, must ever 
be less than unity. In the lower classes the ethical effi- 
ciency is high, but It Is only because the complete possi- 
bilities are very low. The submerged individual gets a 
larger share of the altruism which is open to him; but 
there is so little that is open. 

In this light it is clear that those who lose the most 
economically lose the least ethically. Physical and moral 
life are alike crowded to minimum limits; but whereas 
the physical side of human nature is elastic, the moral is 
not. Without honor and self-respect, as each one defines 
it to himself according to his light, life Is Impossible 
except temporarily; and the lower economic classes are 
not a temporary institution. Until the level of actual 
submergence is reached, as one goes down, the moral side 
of the character does not seem to suffer at all; it gains, 
in fact. But the development of the aesthetic is com- 
pletely lacking: which is probably the reason why we find 
these people so hard to forgive. Let one frequent the 
vv^ork-shops, the boarding-houses and the theaters of the 
poor; he will find his aesthetic sense trampled upon at 
every step. But his moral nicety gets not nearly so many 
affronts as in polite life. He will find a general sense of 
fraternal support in the shop, a clumsy effort at attentive 



374 THE COST OF COMPETITION 

and sympathetic unselfishness in the boarding-house and 
a high, if tawdry, standard of homely virtue in the gallery 
of the cheap playhouse, which he may seek in vain in the 
average office, hotel or stage of aristocratic vogue. The 
level of the starvation wage is the true foundation and the 
sole reliance for stability of the body politic. From it 
may rise a central pillar of morality more cultured to a 
gleaming height; but without the foundation it must 
totter and fall, — as periodically in history it is seen to do. 
It must be recalled, in considering this question, that 
the layer which earns the starvation-wage includes not 
only the manual wage-earners (to which this maximum 
possible ethical development has been ascribed, as some 
may think, without due deliberation), but that it also 
includes all of those classes of society to which are admit- 
tedly accredited, by universal opinion, the greatest moral 
elevation. The clergy, the missionaries, the physicians, 
the nurses, the teachers, the reformers, the inventors; the 
waiters, the artists, the musicians and the architects; the 
firemen, the policemen, the soldiers and sailors, and the 
life-saving crews along our coast; the Salvation Army 
and the Sisters of Charity: these are the classes of pro- 
ducers which are at the bottom of the economic pyramid 
and in the van of our moral progress. They are not all 
alike. Some work In lines very different from the others. 
Some possess the economic advantage over the others 
involved In technical skill. A few individual clergymen, 
teachers, artists and Inventors rise to an eminence which 
seems to place them in economic Independence. But the 
explanation of their differentiation lies In the word genius : 
which Is not a try-square by which the bulk of the world 
may honestly or usefully be tested. As classes they are 
wholly devoted to productive effort, and therefore the 
slaves and dependents of the competitive class. 



THE COST TO THE LOSERS 375 

Worse than this, most of them are devoted to the pro- 
duction only of moral good, for which there is no eco- 
nomic market; and this places them in a position even 
inferior to the manual productive classes, which produce 
a material good for which there is an economic market. 
They do the work they love and take what it may bring; 
and it brings little : the least upon which they can continue 
to be honest and altruistic and artistic. They, as entire 
classes, earn the starvation-wage as truly as do the mill- 
hands. 

If these general statements should still seem to be un- 
warranted, let us turn to the obverse of the situation and 
see how widely the immorality of the country finds its 
expression among the pecuniarily independent, or at 
least comfortable, classes. While it is true that a large 
part of the nation's recorded crime is coincident with and 
a result of submergence below the starvation-wage, yet it 
is also true that an almost equally large portion is coinci- 
dent with a quite opposite character of circumstance, if, 
indeed, it be not likewise a result of it. This latter por- 
tion, however, obtains by no means so thorough a record 
in the criminal courts; for there are a multitude of ways 
whereby turbulence in high life may escape criminal 
action. 

Not to place all the odium of this fact upon our de- 
partment of justice, however, it is to be added that there 
are so many ways in which actual infraction of the laws, 
or at least legal detection, may be avoided in wealth, while 
the sin is the same as in poverty. The impecunious have 
no shield. They possess neither privacy nor diplomacy; 
they can afford neither flight nor compromise nor influence. 
But for the moral lesions of the rich these several aids form 
a polite and effective veil. Look at the gambling and the 
horse-racing, for instance; at the defaulting and embez- 



376 THE COST OF COMPETITION 

zling which these milder Indulgences Invite ; at the dissipa- 
tion and the wanton luxury In high life which sets the 
example for the lowly and leads them to covet and to 
secure by criminality what their betters secure by mere 
sin! Look at the "grafters," arch-enemies of the re- 
public, identified always with pecuniary profits If not with 
sheer opulence ! Look at the aristocratic prostitutes, bar- 
tering womanhood for rank and title and motherhood 
for self-comfort, more insidious yet in their poisoning of 
the life-blood of the state! These are worse criminals 
than the toughs of the slums, for they wield more influence. 
Yet they are under no pressure of dire want. Rolls of 
greenbacks serve as visiting-cards for them, and check- 
books pad each drawing-room and boudoir into a nirvana 
of conscience soothed with satins and servants. Under 
a pressure of temptation and degenerate influence they 
live. It is true; from money too easily gotten, from no 
habit formed of daily industry close to the soil, cultiva- 
ting content with what it brings; more than this, from a 
false standard of comparative rather than of absolute 
worth, set and upheld by the entire nation as the backbone 
of its economic organization. But no such excuse have 
they for their sin as the submerged tenth possesses for its 
crime. 

But to return to those ethically cultured classes of the 
economically oppressed which earn the starvation-wage 
in the service of religion, education, art, medicine and the 
divers methods of life-salvage. If any distinct classes in 
our social structure might be picked out as the happy ones, 
these are they. They stand in continuous refutation of 
the doctrine that happiness depends upon a surfeit of 
worldly goods. But theirs Is the happiness of altruism, of 
philosophic disregard of material environment, not that 
of full and natural life to the utmost. 



THE COST TO THE LOSERS 377 

In the first place, the bulk of the classes just cited be- 
long to the level of skilled labor (Fig. 11) ; the bulk of 
those of shop and mill do not. The education of skilled 
labor stands as a lever by which it is elevated economi- 
cally, but the fulcrum rests upon unskilled labor, which 
is correspondingly depressed. For there is nothing about 
any sort of technical skill which serves it as a defense 
against vertical competition. Education directed com- 
petitively is all-powerful; but education directed produc- 
tively influences not one whit (except indirectly and after 
a lapse of time longer than individual life, through the 
evolution of institutions) the portion of production 
allotted to the producers. It affects only the relative frac- 
tion of that portion allotted to skilled and unskilled labor 
respectively. If every individual producer were imagi- 
nably educated to the same efficiency as is the physician or 
the engineer, and if the same freedom of play were open 
to economic competition as now, the portion of production 
allotted to the entire producing class would be no more, 
very probably it would be less, than it is now. Its distri- 
bution among individuals only would be more even. 
Science and skill and art would get less, and as much less, 
as what Is now unskilled labor would get more. 

It would be quite a secondary result of such an imag- 
inable change that the field of free competition would soon 
be markedly restricted compared to what it is now, with 
corresponding good results from that. But the fact to be 
emphasized Is that not until the greater Intelligence and 
sensibility and power of the educated producer leads him 
to take steps to reduce the extent of competition, either 
(i) by refusing as a unit-class to accept the prevailing 
wage, which is the method of trades-unionism and the 
strike, or (2) by legislative substitution of cooperation 
for competition, which Is the method of socialism, will his 



378 THE COST OF COMPETITION 

economic position be bettered. His increased efficiency In 
production will avail him nothing except an increased 
share taken from the pockets of his fellows, so long as 
he refuses to modify his institutional environment. He 
must enter, as a unit, Into the same sort of a revolt 
against the public sanction of profit-seeking as a national 
institution as the lawyers, physicians and university-pro- 
fessors of Russia are at this moment effecting against 
the pecuniary corruption of their conservative bureau- 
cracy. 

Thus It is that the skilled producers are comfortable 
and happy, In the majority of cases, whereas the unskilled 
are the opposite. They have adopted abnegation and 
asceticism as their faith. Their progress of life Is by 
abandonment. They inherit, or learn unconsciously with 
their work, the high Ideal of work done for the work's 
sake. What worldly goods come their way they may 
spend upon plush furniture and graphophones, or upon 
madonnas and symphony-tickets (top-gallery) ; but ten 
hours of faithful effort per day they spend In the worship 
of good handicraft: and that is better devotion than true 
art receives in many a wealthy family. They do not sell 
their souls for messes of pottage. Between the Sister of 
Charity, the Bohemian artist and the captain of a life- 
saving crew there is great difference in superficial appear- 
ance. Their standards of life may be very differently 
regarded by different readers. But In the cultivation of 
skill and sympathy by the Sister, of skill and insight by 
the painter and of skill and courage by the surfman there 
is so much in common, compared to him who measures 
his progress in life by the cultivation of a bank-account, 
that the differences sink Into insignificance. 

Yet It is not true that the skilled or altruistic wage- 
earners are all happy. Abnegation and high Ideal may 



THE COST TO THE LOSERS 379 

purify their own souls above worldly desire, but it renders 
them only the more sensitive to the suffering and the 
degradation about them : the suffering caused by degrada- 
tion among the worthy poor, the unconscious degrada- 
tion in the vulgarity of the rich. Not even in the highest 
altruism of religious faith may one escape the stings of 
that horrid artifice called barter. The thinking and pray- 
ing artist may forgive the commercial hand which robs 
him; but even in his noblest moments comes the bitter- 
ness of the cup of Gethsemane: to think that the race 
of man, which might be so strong and good and fair 
to look upon, should become so small and cruel as to 
waste its time in the juggling of prices for personal 
profit. 

But very few attain to such a height. Not a few fail 
to keep even that competence of daily income which alone 
can feed it. The wage-earner of the family dies, or suf- 
fers long disease, or grows old. The mother breaks down. 
The children seem to run to daughters, and to unselfish, 
intellectual, unmarriageable ones at that. The studio or 
laboratory is replaced by a boarding-house. The old 
ladies' homes claim what is left, after that gives out. 
There is no continuity to the class. The income allotted 
to it by the economic powers Is not even a starvation-wage. 
If it were not for constant recruit from ranks below, of 
young men with less cultivation but with greater vigor, 
driven upwards from the soil, by the force of natural 
growth, from families where the children outnumber 
the books and pictures, the class would soon become 
extinct. 

Not all the endowed scholarships and Carnegie libraries 
in the universe can reverse, or even annul, the activity of 
this great fact. They are returning to the impoverished 
soil but a minute fraction of what is being steadily drained 



3^0 THE COST OF COMPETITION 

from it and dissipated by barter. Not all the fervent 
preachings of a patriotic and paternal president, calling 
ever for more children, to stop up the leak, can reverse 
this law of gravitation, can stanch this oozing away into 
commercialism or chaos of the select of the republic. 
Nature here is kinder than man. She consistently refuses 
to bring into existence what man insistently refuses to 
feed. 



IV 

THE COST TO THE WINNERS 

" For what shall it profit a man if he shall gain the whole world and 

shall lose his own soul ? " 

— Mark, 8: 36. 

" For I say, this is death and the sole death, when a man's loss comes to 

him from his gain." 

— Broivning. 

IN the great competitive struggle of the present gen- 
eration, what do the winners win and what do they 
lose ? 
By the word winners, in this connection, is meant the 
winners in competitive effort. It does not necessarily refer 
to all those who have won wealth, for many professional 
men win wealth; yet the professional occupations, with 
the exception of the civil law, are purely non-combative, 
or productive, in their nature. It does not necessarily 
mean those who have won leisure, for many men who have 
won enormous competitive power have almost no leisure; 
they are as much overdriven by their efforts at maintain- 
ing their much-assailed position as is the drudge or the 
harassed pirate. It refers, first, to those who, as indi- 
viduals, strive in a purely competitive way; secondly, to 
those who, as a class, have thereby attained to power; and, 
thirdly, to those who, as heads of families, represent the 
leisure-class, though they may know little leisure them- 
selves. It includes the ennuied, blase society-swell, as well 
as the hurried, worried business-man. It covers the over- 
fatigued hostess of a brilliant social circle, as well as the 

381 



382 THE COST OF COMPETITION 

self-comforting recluse. It means the over-schooled chil- 
dren of the merely well-to-do, with their lessons in music, 
drawing, foreign language, dancing and gymnasium, on 
top of the regular day and Sunday schools, as well as 
the over-tutored, under-disciplined children of the very 
wealthy. It includes all those who, by devoting them- 
selves to vertical competitive effort, have kept themselves 
out of the productive layer of society, as well as those 
who, by horizontal competitive effort of a winning sort, 
have succeeded in amassing wealth. 

To any such class as this the cost of competition comes 
home in the guise of physical privation only in sporadic 
individual cases. Of the barterers, even those who win 
the starvation-wage of their class are comfortably housed, 
fed and educated. Even the widows and orphans are 
usually so ; a sufficient Inheritance of vested interests keeps 
the wolf from the door. 

But to each one of them comes steadily home, and ulti- 
mately strikes to the quick, the ethical cost of competition. 
Life cannot be carried on for the sake of profit-seeking 
and the profit-seeker, as a class, not lose continuously there- 
by. The barterer may be as philanthropic, as charitable, as 
scrupulous in his religious observances, as conscientious 
In all his relations with men, as may be; yet in his week- 
day collections of rent, dividends and profit, with all which 
that implies, he loses inevitably his chance for the highest 
ethical development. If, on the other hand, he Is as mean 
as these avocations tempt him to be, he is an ogre. His 
striving for concrete, perceptible morality is denied ethical 
satisfaction as persistently and ruthlessly as the striving 
of the laborer is denied economic satisfaction. If his 
Innate generosity and morality be sufficiently insistent to 
coerce him, he abandons his competitive for a productive 
existence, for conscience's sake, as do the few business- 



THE COST TO THE WINNERS 383 

men who turn true statesmen or artists; but with it he 
abandons economic power. He not only departs from 
our argument, by ceasing to be one of the " winning " 
class, but he leaves to less scrupulous hands the field and 
the power which he himself might have wielded with 
moderation. 

In order to have maintained that power he must buy 
in the cheapest market and sell in the dearest. There's 
the rub. He personally may refuse to oppress labor, to 
bulldoze the needy seller, to take advantage of the be- 
wildered buyer. His choice of the cheapest article of raw 
material which is offered sets free in others all the deviltry 
of competition in profit-seeking. How may he ensure 
that the one who sells to him at the lowest price has not 
attained his figure by oppression of labor, by taking 
advantage of others' bankruptcy, by employing child-labor 
and by all the rest of the string of cruelties which men 
are hired to undertake by the pecuniary profit artificially 
attached thereto by the competitive system ? ^ 

If he should feel the truth of all that, how may he 
avoid it? Buying at more than the lowest market-price 
avails nothing. That simply places a further premium 

1 Mrs. Florence Kelley, Secretary of the Consumers' League, who is con- 
stantly in contact with the factory-life employed in the manufacture of 
women's underclothing, involving much female and child labor, testifies 
that the great majority of proprietors or managers are too humane to 
maintain toward their employees the attitude which competition forces upon 
them. But they can and will hire less scrupulous foremen and forewomen, 
who tyrannize the workers unmercifully, — to the inexplicable quieting of 
the managerial conscience. Mrs. Van Vorst, in her book, " The Woman 
who Toils," gives a graphic picture of her experience in a Chicago fac- 
tory, owned and managed by a, most benignant gentleman, who operated 
it upon this plan, with the result that life therein was literally unendurable 
to many of the girls. When they left its doors no one saw them more, nor 
cared. The responsibility was over and the conscience clear. Can it be true 
that the Recording Angel is writing against his name no account of what 
those girls walked out into when they " threw up " his intolerable " job " ? 



384 THE COST OF COMPETITION 

upon deception. He cannot ensure that the seller at the 
higher price has incurred his figure by generosity to labor, 
or by similar altruism in other directions. 

Once set free the doctrine that prices are rightfully 
variable at will, that he who can influence them may do so 
and may put the difference into his pocket, and the full 
harm is done. Comparative individual morality has then 
ceased to he a factor in the result. It is a factor only in 
determining who stays in the race and who drops out. 
It does not by one atom alter the evil nature of the effort 
nor the empty character of the prize. Each man is 
tempted to do his worst. If he resists the temptation he 
loses his economic influence. He is forced to step aside 
and let the mad world surge by in its race for wealth. If 
he yield, he has set going forces which will ramify end- 
lessly and permeate the entire complexity of social struc- 
ture, converted as they go into resultants and reactions of 
a sort potent for evil to an extent never dreamed of nor 
desired by their real originator. 

For instance, this barterer may wish to give his family 
an European trip, or his son another year at college. 
Most laudable! So he goes on 'Change and bears a few 
industrials, or takes a flyer on a margin ; or he makes extra 
effort and corrals a competitive concern which has long 
stood in his way; or he effects a pool of interests become 
too combative for mutual profit. He makes his " pile," 
legally and honestly. He spends it honestly. He sees 
nothing further. But a thousand miles away a widow's 
securities turn worthless on her hands; five rival manufac- 
turers forego the family's long-talked-of European trip, 
or remove their sons from college to office; a shop shuts 
down and sets a thousand hands adrift in winter; a million 
defenseless housewives find the price of some daily neces- 
sary of existence increased. Most damnable, all of it! 



THE COST TO THE WINNERS 385 

But It is utterly useless to condemn the individual doer 
of these deeds. We may, if We wish to be so foolish, 
waste time in condemning the trusts or the trades-unions, 
the capitalist or the laborer. Not all of their acts are 
easily defensible. But what we may not forget, under 
penalty of treason, is that they are all, like the honest 
barterer just adduced in illustration, doing only what we 
are doing, — except that their opportunities and temptations 
are on a larger scale than ours. In general, they and we 
are doing what the law permits and what neither the 
pulpit nor the press forbids, or even discourages; what 
they both sanction. In fact, and urge upon the youth of 
the country as Its properly highest aim, viz. : To succeed 
In business. 

To succeed in business Is to make all you can out of 
your neighbor. " What the traffic will bear " Is the only 
limiting rule as to high prices In the commercial world. 
There Is none other voiced by either church or state, — 
though the true faith speaks up about It in no uncertain 
tone. But then, that Is religion, and It and business have 
never been known to mix well. The law mumbles some- 
thing about "six per cent"; about as effectively as might 
be expected from an Institution which has abandoned all 
pretense to foundation upon moral principle and has 
planted its banner upon precedent and a percentage. Let 
one only be so skillful as to cause his twelve per cent, 
or his thirty per cent, to look merely like five, upon 
most superficial inspection, and he receives the plaudits 
of the teachers, the primates, the bench and the well- 
to-do. 

" The court awards it and the law allows it" Only 
the dim multitudes grow a little more restive, murmur 
confusedly, and feel about their countable ribs; knowing 
not how the pound of flesh has left them, but only that It 



386 THE COST OF COMPETITION 

is gone. Also, that more than one drop of life-blood has 
gone with it. 

But the shameful part of it all is that, in spite of this 
wide belief in the virtue of commercial competition, each 
actor in competitive effort is conscious, cannot help being 
conscious, to some quite appreciable degree, of what he is 
doing. He knows that his effort is to get command of 
the largest market at the highest price compatible there- 
with, and that any increment in either comes from his 
neighbor's pocket and is to the latter a loss. He knows 
that this is the antithesis of unselfishness, of Christianity. 
He either feels the sinking of his self-respect as he does it 
or else he has grown callous. He retreats, very natu- 
rally, behind the defense that failure of selfish effort would 
only reverse the situation, not remedy it; that then the 
other man would just as gleefully and just as wickedly 
pocket the defendant's loss. 

The defense stands good as an indictment of the insti- 
tution of barter, but not as freeing the barterer from 
blame. He has heard, perhaps the day before, the ser- 
mons of Him who taught the return of good for evil, who 
taught a better rule than the golden one: Do to your 
neighbor better than you would be done by. It is not 
sufficient to sing amens to these doctrines on Sunday and 
to subscribe to the Charity Ball on Monday. All through 
the week let him remember his Sunday's attitude, which 
he felt to be so elevating and proper, in his daily trans- 
actions with all men. He will, of course, find it impossi- 
ble of incorporation into his business acts. But it will 
come well home to him, if he but try it conscientiously, 
that it is impossible, that profit-seeking variation of prices 
and the practice of Christianity are hopelessly incompati- 
ble. If he makes but the slightest pretense to consistency 



THE COST TO THE WINNERS 387 

he will see plainly the alternative before him: To retire 
from competitive business or to retire from avowed 
Christianity. 

But if the weak flesh fails of that altruistic attainment 
it can at least rise to a denouncement of the situation which 
tempts it. The situation is absolutely a human and an 
artificial one. Man has made it. He can break it. He 
has not made it consciously; he has inherited it from the 
more brutal past, as he did slavery. But it is none the 
less than slavery an artificial institution, to be absolutely 
and permanently abolished just so soon as enough good 
men and true say, each to himself and to his neighbor: 
It shall be done ! 

Upon every one who barters, whether for a railroad, a 
day's work or a yard of muslin, hangs heavily this indict- 
ment of guilty responsibility for the entire " social ques- 
tion." It Is not the Vanderbllts nor the Rockefellers 
who alone are oppressing the poor; for if they ceased all 
economic activity others would take their places. It is 
each individual citizen, carrying on his daily portion of 
bargaining, buying his shoes and hatpins, selling his 
particular wares, hiring his factory or domestic help, — 
hoping ever to make his efforts more successful, more 
powerful, more profitable; opposing ever the efforts of 
the open-minded for the cessation of all barter, — these 
are the ones who, conscience-stricken, must lie awake at 
night to hear the wails of the needy and the broken- 
hearted, the curses of the vengeful and the desperate 
throughout the land. 

All this aside, however, does competition pay, without 
regard to conscience, even when one wins? Does it bring 
peace of mind, or health, or leisure, or insurance against 
any of the physical or mental ills of life? Does it create 



388 THE COST OF COMPETITION 

a community-environment, visible or invisible, of the sort 
ideal in modern civilization, a thing of peace, beauty and 
harmony? 

The business-man is always worried. He is always 
overworked. His family scarcely knows him. He lacks 
leisure and the aesthetic appreciation which goes with it 
almost as thoroughly as does the laborer. One of the 
editors of one of our best monthlies once remarked: 
" I never knew a man truly lovable, to the core, but that 
he was a man of leisure." ^ The business-man's leisure 
never comes, except with competence and retirement. To 
many men these never come. When they do they find 
him broken in health, chained to commercialism of 
thought and taste and lost forever to true amusement. 

A young man, a stranger to New York and what it 
stands for, was once taken to view the yachts laid up in 
winter-quarters in South Brooklyn. There were arrayed 
not only the white-winged craft of moderate size, costly 
means to a day's racing or a week of cruising, but dock 
after dock filled with great steam-yachts, veritable baby- 
liners, many of them fit for the Australian passage and 
all of them palaces within. The figures of first and cur- 
rent cost were astounding. " Where," he asked, " can 
enter the return commensurate with such outlay?" 
" The men who own these boats," came the reply, in a 
tone of derision at his greenness, '' have bought every 
pleasure purchasable here below. Even so, they cannot 
spend their incomes. They are most of them dyspeptic. 
Many of them are overworried. All of them are bored. 
If they can keep a steam-yacht in commission at a cost 

2 " Half the charm of people is lost under the pressure of work and the 
irritation of haste. We rarely know our best friends on their best side; 
our vision of their noblest selves is constantly obscured by the mists of 
preoccupation and weariness." — Hamilton W. Mahie. 



THE COST TO THE WINNERS 3^9 

of a hundred thousand a year and get out of It a single 
half-day of real enjoyment, the investment is a profitable 
one — to them." 

The answer sank deep. If this be success, the lauded 
goal toward which our young men are urged and for 
which they are trained, where Is the Intelligence of our 
vaunted civilization? If this be legal, where one man 
may spend for a day's pleasure, often for mere vulgar 
display, still more often in dissipation or in empty politi- 
cal ambition for public office which Is criminally unpa- 
triotic, a sum which means life or death to hundreds or 
healthful pleasure to tens of thousands, — If this be legal, 
where Is the boasted justice of our free country? 

That incident occurred nearly two decades ago. The 
answer which time has brought to the Inquirer is more 
cruel, more absurd, more stupid in Its cruelty, than could 
have been compassed by his youthful imagination. Not 
only Is any man who attains the commercial power legally 
free to tax, In the form of profit. Interest, rent, dividends 
or the " cost of doing business," millions of his fellow- 
citizens, until the plethora of his accumulations stifles 
him, but he Is permitted to collect that tax by means of a 
free fight over the spoils which wastes and loses two dol- 
lars for every one which he succeeds In clutching. For 
clumsy inefficiency, as well as for cruelty, slavery Is not 
to be compared with the competitive method of the dis- 
tribution of wealth; for slavery affected, directly, only 
an Inferior race of men, while barter oppresses the best 
in the land; slavery conserved, with profit, those whom It 
oppressed, as railroad-contractors do their horses, while 
barter Irresponsibly murders those whom It has robbed. 

But these considerations do not bear so directly upon 
the ethical side of hfe as does the Impalpable, but not 
the less coercive, fact that every man is placed In relation 



390 THE COST OF COMPETITION 

to his neighbor upon a comparative basis. His income, 
or his bare opportunity to strive for one, depends not 
upon his absolute, but upon his comparative, productive 
ability. A given person may possess parts, inherited or 
acquired, which fifty years ago would have placed him in 
impregnable superiority. To-day, because of tremendous 
improvements in productive methods and machines, those 
same parts will produce five or ten times as much wealth 
as they would have then. Yet their possessor now 
receives the starvation-wage, or perhaps no employment 
at all. He has become the unknown employee of some 
" trust." Fifty years from now he, or his grandchild, 
having the same parts, may actually produce ten times 
as much as now; yet, if competition has increased like- 
wise, they will be poorer then than now. Ecce progress 
and poverty! 

This happens solely because his income amounts to the 
margin of comparative superiority over his fellows. The 
worth of his absolute productivity Is lost sight of. He 
is like a horse capable of usefully traversing a mile with 
the useful celerity of two minutes and twenty seconds; if 
he be placed in comparison with race-track neighbors capa- 
ble of trotting but a few seconds faster he becomes 
almost worthless. We employ our great army of Indus- 
trial servants upon the national principle of dealing In 
margins, instead of buying outright. 

On the race-track or In the broker's office, where sport 
is the object of all effort, this may be right enough. But 
for the nation to deliberately base Its entire Industrial 
structure upon, and to make the question of life and death 
for many of Its citizens depend upon, such a purely gam- 
bling principle is hardly in convention with our other 
standards of public morality. 

The application tests the moral. Since the attitude of 



THE COST TO THE WINNERS 391 

each toward all the others is condemned to be that of 
odious comparison in all matters industrial and commer- 
cial, it inevitably becomes so in all private life. With the 
winners and their families the perception of absolute 
beauty is almost impossible; its proper appreciation Is out 
of the question. Everything Is comparative. Realities 
are lost sight of. Private possessions and social func- 
tions, the material environment of home and childhood 
and the immaterial attainments of education and culture, 
the fruits of creative art and the exhortations of the 
morally Inspired, are all viewed alike as worthy or un- 
worthy, as offering the consolation and inspiration of 
beauty or the annoyance of a thing ugly and hateful, 
solely according to whether they be more or less than 
that of a neighbor or of some other class. The philo- 
sophical truth that all things are beautiful and that ugli- 
ness does not exist falls surely into stony soil In the ears 
of the present generation. In the midst of luxury which 
might otherwise be beauty and comfort also, there Is no 
wholesome content. In each one's mind the question Is 
not: " Am I well off? " but, " Am I better off than he, 
or she? " The right and proper discontent of man with 
his attainments coupled with the divine peace of content 
with his possessions has given way to the sordid com- 
bination, in the self-made man, of complete satisfaction 
with himself and complete dissatisfaction with his pos- 
sessions. 

In such a field as this the teachings of art, of religion 
and of daily life struggle for a compromise in a field of 
hopeless Incompatibility. . The result Is not so good, even, 
as an honest compromise. A dishonorable duplicity 
takes Its place. There has grown up and been accepted a 
dual system of ethical standards. Its two opposite parts 
are: (i) those of the shop and office, and (2) those of 



392 THE COST OF COMPETITION 

outside life. In the former the association of man and 
man is that of machine to machine, grouped together 
solely for convenience and efficiency in production. Good- 
ness consists of success in those directions; failure in the 
same is blameworthy; all else is negligible. Those ameni- 
ties and courtesies which, in the long run, are seen to 
lubricate transactions are admitted; all others are barred 
out. The one unpardonable sin is to fail to be produc- 
tive, at least in. the barterer's sense of the word. 

So universally is it taken for granted that these stand- 
ards are true and right, so steeped in and blinded by the 
revered traditions of " business " is the average person, 
that it is actually necessary to call attention to the com- 
plete reversal of these standards in every other walk of 
life, in all the other activities of these same average 
people. 

It can scarcely be forgotten that in the family-home 
productivity is no criterion of worth, no gauge of the 
portion of available love and care and luxury to be 
allotted to each. It is usually the most useless : the babes, 
the aged and the invalids, who get the best. To the pro- 
ductive ones, the healthy adults, their very ability to pro- 
duce is unconsciously accepted as being itself their chief 
reward in life. They can be up and doing; therefore they 
need no other consolation or enjoyment. Yet in the 
family we have the oldest, the most stable and the most 
perfect example of that community of interests, and of 
cooperative specialization of industry for the protection 
of the race against want, the evolution of which is now 
taking place before our eyes and in our hands in the 
growth of the organic state. 

It is less familiarly obvious how universally these same 
standards are applied to all public activities not tainted 
by association with profit-seeking. Let an inhabitant of 



THE COST TO THE WINNERS 393 

another planet arrive and inquire of us whether we be 
civilized: what would be the reply? We should point 
with pride to the hospitals, the lunatic and orphan 
asylums, the homes for the aged and infirm, the public 
schools and the reformatory prisons. We should explain, 
most gratlfylngly, that the community as a whole recog- 
nized to the full the truth of the fact that a chain is no 
stronger than its weakest link, that a community can 
never far surpass in development Its weakest class, that 
any small disregard of human life, liberty and happiness 
is publicly demoralizing; in short, that life is sacred. We 
should show how consistently and systematically, at what 
pains of scientific and costly effort, every scrap of maimed 
humanity Is cherished and protected; how no case enter- 
ing the hospital Is so desperately hopeless as to stay the 
surgeon's best effort; how no poor wretch may be so 
hopelessly Insane or so ruthlessly criminal (except In one 
single line) that he should not be fed and housed to the 
end of his unnatural days; how the law and the public 
officers protect alike the babe unborn and the senile idiot. 
We should show in all this how consistently the con- 
nection between productivity and protection Is not only 
neglected, but Is reversed; how the least productive 
members of the body politic receive the most systematic 
care. We should reveal how thoroughly the fact Is 
grasped that any departure from this standard, any dis- 
carding of life as comparatively worthless, any prostitu- 
tion of life to a valuation of It in terms of anything more 
material, were a double loss: of It and of our best selves 
too. If the Spartan murder of unpromising children, or 
of the hopelessly mad, were proposed, we should not 
only shudder our refusal In horror; we should fearfully 
falter that we did not dare. We should realize that It 
would not pay, in the long run; that the reduction of life- 



394 THE COST OF COMPETITION 

valuation to terms of mere present productivity inevi- 
tably loses to the community its greatest potentiality for 
future productivity : solidarity. 

Yet in the shop and office these altruistic , standards 
are utterly neglected, with neither disgust nor fear. So 
soon as a member of the little community becomes non- 
productive, — or rather unprofitable, productive to a 
degree less than a certain standard, — he or she is dis- 
carded. In enforcing this unwritten law the industrial 
authorities, petty or powerful as the case may be, will 
not recognize any wrong action. They say that they 
must; which is true, in one sense. But they do not need 
to say that it is right. These men are Christian gentle- 
men. They support and encourage the Institutions of 
charitable civilization. Why can they not see that it is 
the unchristian ethics of their commercial actions which 
alone creates the demand for them? The head of an 
office will mechanically and unthinkingly discharge a 
female employee, creating thereby a potentiality for 
crime, lunacy or suicide, when he would rebuke himself 
and apologize to her for clumsily colliding with her on 
the sidewalk. The women of his social circle must not 
receive at his hands the slightest suggestion of affront or 
annoyance; the women of his factory receive at his hands 
an income such that honor can be maintained only at the 
expense of health, sanity and life itself, in the face of 
temptations, due to unnaturally congested homes, which 
only the minority can resist. 

This dual and inconsistent standard of ethics is hope- 
lessly demoralizing. Does he say that he cannot help it? 
I say that he is the only one who can help it. This prob- 
lem will be solved by the able business-men of the com- 
munity or It will not be solved at all. . He cannot help it 
by arbitrarily and individually raising wages. He can 



THE COST TO THE WINNERS 395 

aid it In only one way, and In that way with absolute cer- 
tainty of success : By combination with his fellow bus- 
iness-men ( I ) In absolute disregard both of Immediate 
private profit and of partisan politics, and (2) with the 
firm purpose of substituting the cooperation of the entire 
community for the present commercial competition be- 
tween the strongest Individuals. The bread thus cast 
upon the waters will not only return to him an hundred- 
fold In the shape of the production and enjoyment of 
commodities, but In the first free growth of his class In 
the line of ethical development. 

The details of plan and policy for doing this can safely 
be left to his judgment. Neither the statesmen of the day 
nor the book-writers and economists possess the equip- 
ment essential for their proper direction. 

But It Is not alone In the business-office that the false 
ethics of commercial competition prevail. There Is no 
field of higher effort ever touched by the winners which 
Is not tainted with the habit and its philosophy. More 
men send their sons to college because other men send 
theirs than because they really believe In added efficiency 
or happiness to be gained thereby. All colleges arrange 
their curriculums with a sharper eye to keeping up the 
size of student-body than to the really best development 
of the young. In music and in art it Is much the same. 
It Is the one who can fill the auditoriums who Is declared 
fit and who Is accorded the means to survive, not the one 
who leads the way toward the highest ideals. The 
churches bid for patronage almost as do the theaters. 
The yellow journals are doing nothing worse. In every 
pleasure or amenity of life the man who measures his 
day^s work as good or bad according to whether It be 
greater or less than his fellow's, measures inevitably his 



396 THE COST OF COMPETITION 

enjoyment by the same scale. His music, his art, his club, 
his church, his dinner-table, his country-home, — nay, he 
is tempted even to include his wife and family, — are 
all good or bad, not according to whether they embody 
and reflect some modicum of that divine beauty which 
lies in all things, which is never negative and which it is 
the sole joy of life to perceive; they are good or bad 
according as they may be larger or smaller, better or 
worse (to his superficial standards), than others of the 
circle which his birth and tastes have led him to enter, 
or to try to enter, and adopt. Look at your few cherished 
friends, whose best side you see, and you will deny this. 
Look more abroad, in the newspaper reports of divorce- 
trials, forgeries and defalcations, and you will see that it 
is true, that the fruit follows the vine. 

Since, in such social and ethical competition as this, 
the failure of the many to equal the advanced position 
attained, necessarily, by only the small minority is inevi- 
table, the winner of the economic race is prejudged and 
condemned, by his fundamental philosophy, to failure of 
satisfaction in the ethical field of effort. As surely as he 
has won above the whole world, or even tried to do so, 
he has lost his best soul. 

It IS this compensatory balance between economic loss 
and ethical gain which founds the two aristocracies of 
free America. The aristocracy of wealth has won 
economically and has lost ethically. It has hopelessly 
lost that proper perspective, that sober estimation of all 
things and that sensibility to the most delicate, even the 
imperceptible, which together constitute good taste. It 
has the superficial appearance, the studied manner, of high 
cultivation. All else is denied it. 

The intellectual and ethical aristocracy, on the other 



THE COST TO THE WINNERS 397 

hand, has lost economically, more or less voluntarily, in 
that either it will not or it cannot enter the race for 
wealth; but it is thereby freed for real ethical develop- 
ment. It may include the offspring, after sufficient gene- 
rations, of the other class : those who have inherited, 
rather than acquired, privilege and opportunity and who 
have failed to inherit the taste for profit-seeking. But 
its greater proportion consists of those who are receiving 
the starvation-wage for the best productivity which the 
twentieth century affords. Theirs are the highest aims, 
the noblest endeavor, the finest taste, the genius for crea- 
tion. Chained to the tread-mill of pot-boiling, except 
for the consolation of abstract or religious faith theirs 
are the tortures of Tantalus. On every hand lies truth,, 
beauty, inspiration, opportunity, loud need: for apprecia- 
tion, absorption, creation, devotion. But theirs is neither 
the time nor the strength nor the means for response. 
They are fearfully the sufferers. Pain is apportioned to 
refinement of sensibility, not to force of blow. But are 
they the greatest losers? How does the community fare, 
compared with what it might, for their paralysis? 

It is what they are and what they have to give which 
the winners fail to attain. It is these, the things which 
they can neither be nor have nor understand, nor hardly 
see even, which constitute the immeasurable loss of the 
winners. 



THE COST TO THE COMMUNITY 

THE real cost to a community of any Institution 
which makes for the degeneration of ethical 
standards lies, of course, In Its resultant effect 
upon each Individual citizen. That the highest develop- 
ment of the Individual Is the object of all human effort and 
the proper test of every human Institution or doctrine Is 
agreed upon alike by the most antagonistic schools of 
modern political doctrine. From the anarchist at one end 
of the line, urging that there be no law but the Individual 
will, to the socialist at the other, urging that the natural 
Integration of individual wills shall be made really superior 
to any one of them, — through all the intermediate degrees 
of political faith upheld by less radical citizens, — the dif- 
ference Is wholly one as to ways and means advocated, not 
as to the object In view. 

In the preceding study of the ethics of the individual as 
Influenced by the economic forces controlled by one class 
of citizens, therefore, the ultimate goal of the present an- 
alysis might seem to have been both reached and covered. 
But the transmission of the effects of competitive effort to 
the individual character is not always so direct nor so 
plainly visible as in the cases cited. There the discussion 
was confined to the reactive effect of competitive effort upon 
the individual exerting It, or to its detrimental effect upon 
the fortunes of others through the medium of merely 
material forces. For the time, this was deemed a suf- 
ficient Indictment. But competition does more and worse 

398 



THE COST TO THE COMMUNITY 399 

than either of these.. Its economic forces become trans- 
muted into ethical ones of a social order, and in that guise 
transmitted throughout the community in parallel with, 
and in more insidious fashion than, the original economic 
forces. In short, competition does harm In three dis- 
tinct ways: 

( 1 ) It robs and starves, and in that way degenerates, 
the individual producer. 

(2) It perverts and corrupts the individual barterer's 
opportunity for ethical development. 

(3) It establishes standards and customs within the 
community which react to the detriment of every citizen, 
without regard to whether he belongs to the bargaining or 
the producing classes. 

It will be convenient, and quite sufficient for the pur- 
poses of the argument, to investigate these secondary social 
effects of competition upon our national standards of life 
under the topics of Crime, Corruption, Education, Art, 
etc., as representative of the long list of less prominent 
fields for Its reaction Into which this series might be 
expanded. Of these absent members only one. Inebriety, 
deserves special mention here. That It Is one of the most 
direct fruits of the competitive system, of the reward In 
the shape of expanded profit which we offer each brewer 
and saloon-keeper for his efforts at expanding his trade, 
there can be no question. That all efforts at Its restric- 
tion by law or public opinion must fall until this most 
effective expansive force be removed, by the manufacture 
and sale of all alcoholic beverages by those having no 
Interest In the volume of trade handled, but rewarded by 
a fixed salary, must be obvious. That It Is utter folly to 
operate an Industry such as this, which all agree should be 
restricted to the utmost possible, under the profit-making 
system which is universally praised as the one leading to 



400 THE COST OF COMPETITION 

the most rapid expansion of trade wherever it is applied, 
all must agree. For the reactionary process which has here- 
tofore been shown to enter to the restriction of trade con- 
ducted for profit, viz: contraction of purchasing-power, 
cannot operate to the alleviation of the liquor traffic. The 
attitude of mind which contemplates inebriety is never con- 
scious of restricted purchasing-power, any more than it is 
of endangered ethics. If the money be in pocket, it buys 
and drinks. Thus, it is plain, the total restriction of pur- 
chasing-power due to all profit-seeking, that in liquor- 
selling as well as all other industries, falls, in the man 
overwearied by the futility of life and labor and face to 
face with temptation toward the temporary Elysium, of 
intoxication, upon his purchasing-power reserved for the 
necessaries of life. The harder you oppress him with bar- 
ter the more beer and the less bread he will buy. 

All of these considerations must be so obvious to any- 
one who has at all succeeded in following the previous 
analysis of social relationships that it hardly seems neces- 
sary to argue them. Only the importance of the liquor- 
evil could warrant it. Nor would the duty be evaded 
here were it not that there is no topic concerning which 
the average man has such firm preconceptions and conclu- 
sions, and such complete confusion of cause and effect, as 
the liquor-question. There is hardly a department of 
economics or ethics into which its influence or its reactions 
do not extend; but in every one of these it is so much a 
matter of obscurity as to whether the liquor be an inflam- 
matory cause of other evils or an intensive reactionary 
effect, that little progress is to be made in the discussion of 
its details. We have now pointed out the fundamental 
forces which are to be kept in mind in its consideration. 
More than that it does not seem profitable to attempt here. 

In the development of the argument allotted to these 



THE COST TO THE COMMUNITY 401 

several fields of ethical activity it will be necessary, in 
order to prevent confusion, to carefully define and some- 
what restrict the meaning of the several captions within 
useful limits. The word crime will here be restricted in 
its definition to refer only to physical violence, to ebulli- 
tion of animal spirits or passions beyond proper control, 
to misdemeanors usually adjudged in the criminal courts 
only. 

The word corruption will here be defined as covering 
all crime of a purely pecuniary nature, whether grand or 
petty larceny, or forgery, whether occurring on the part 
of a governmental official or a citizen privately employed. 
Such cases might come under either criminal or civil 
prosecution. 

The word education is to be understood in its broader 
sense, as Including all the grades and sorts of educational 
institutions; but it is also to include that more intangible 
but far more effective education of the young which is 
exhaled to them from the surroundings of their childhood 
days, and the standards of taste and of right or wrong 
which they find about them as they pass through the form- 
ative years of adolescence, than it Is the more deliberate 
and conscious teachings of later years. 

The word art Is used to refer to questions of public 
taste. It is necessary to remind the reader here of the 
difference between true public taste and private taste pub- 
licly expressed. If chance has led, for instance, some pri- 
vate citizen to create, or even to present to the public au- 
thorities, a statue of the St. Gaudens class, a picture worthy 
of Titian or Turner, or a library-building such as a Rich- 
ardson might have imagined, that is not an expression of 
public taste ; that is purely an individual phenomenon. In 
the face of it the community bears the attitude of passive 
acceptance, at the most. It was not responsible for its 



402 THE COST OF COMPETITION 

Initiation or Its mold. It does not deserve the credit for 
Its existence. In consequence, both the phenomenon and 
Its results are of a sporadic, haphazard and desultory 
nature. In their reaction upon the current growth of the 
community they are not coercive. That they do exert some 
reaction Is not for a moment to be denied; but Its nature 
Is one of resistance In a losing game, one of a partial stem- 
ming and diverting of the floodtlde of life which Is pour- 
ing past them, quite otherwise Intent upon Its real com- 
munity-alms, than It Is as the natural and unconscious 
expression of the main purpose of the adult unit-life of the 
community to Itself. Public taste of this latter sort at one 
time brought forth the temples and statues of ancient 
Greece, at another Roman law, at another the cathedrals 
of central Europe ; but It has had almost nothing to do with 
those periodic outflarlngs of Individual creative genius 
which have Illumined almost all countries and all ages, 
largely without regard to the state of war or peace, of 
wealth or poverty, or of political development which pre- 
vailed at that particular time and place. 

It has already been pointed out as a preface to further 
discussion that the great bulk of the producing class 
Is hopelessly without taste, although this same class, eco- 
nomically speaking. Includes that minority which leads the 
world In the highest development of taste. Further, that 
this minority acquires or cultivates Its taste wholly In defi- 
ance of, not In consequence of, economic forces, that Its 
votaries enter the producing class because they possess 
too much taste to waste their lives In barter, and that they 
enter It facing the certainty of a life of comparative pov- 
erty.^ Barter does not accord to Its adherents that taste 

1 It is a fact worthy of serious reflection, in connection with what has 
already been said concerning the continuous recruiting of the upper 
aesthetic classes from the lower, that the great majority of the latter's 
individuals, in their efforts at improving their condition, should seek im- 



THE COST TO THE COMMUNITY 403 

the chance for which it removes from the lower classes, 
any more than it saves to them the wealth of which it robs 
us all. Barter is inimical to taste and cultivation in every 
direction; it crushes it from the producing classes by star- 
vation and from the bargaining classes by plethora. The 
entire history of art, science and education on the one hand 
and of barter on the other reveals relentless warfare 
between the two. The former have developed only as 
they have been able to prevail over the latter. The classi- 
fication of individuals in their direct relation to the com- 
petitive system on questions of aesthetic development is 
thus complete. It is the indirect relations which lie quite 
outside this list and which are noted in paragraph (3) 
which now concern us. Under this head it seems proper 
to look a little more broadly at the community as a whole 
for further evidence as to the extent to which the individual 
is unconsciously affected by the influence of competitive 
effort. 

Crime ^ 

Crime is the natural resultant of two forces, which act 
in opposite directions : 

( 1 ) Temptation. This must be the greater of the two, 
though not necessarily great to other eyes than those of the 
tempted. 

(2) Lack of will-resistance. This must be the lesser 
of the two, though not necessarily slight. 

proved skill in productive art, at all sorts of technical schools, rather than 
the cultivation of skill in barter. When we contemplate the comparative 
poverty of reward for the former and the inflated pecuniary returns for 
the latter, when we realize the comparative forces of this artificial situa- 
tion, the comparatively slight response of the youth of the land to barter's 
gilded bribes reveals nakedly the direction of the natural biological tend- 
encies of the race and renews our faith in man. It is not in human nature 
at all to turn willingly away from the study of God's footstool and the 
cultivation of His handicraft toward the savor of the flesh-pots. 

2 For a fuller discussion of the growth of crime, see Part I., page 301. 



404 THE COST OF COMPETITION 

Temptation arises from physical desire refused natural 
gratification. For the clear understanding of this fact 
there must first be annihilated the common error, viz. : 
That ungratified desire impels the individual toward the 
lawful means of gratification. 

The common attitude toward the unfortunate, for 
Instance, is that the stimulus of hunger is needed In order 
to make them work, for they are so very lazy. Yet 
equally common, and In the same minds, Indeed, occurs 
the opinion that the unfortunate mu°st always be expected 
to steal, etc., for their hunger, coupled with their laziness, 
naturally causes them to shun work and to turn Instead to 
criminality. These two opposite and Inconsistent atti- 
tudes are assumed In turn by the same people, by well- 
meaning people, In explaining to themselves how it is that 
some are hungry and some unfortunate. 

Indeed, these superficial doctrines are both needed, at 
least for the salving of conscience ; for In no other way can 
the doctrine that the suffering are deservedly so, and are 
beyond our responsibility, possibly be sustained. But 
for an honest understanding of the matter the first question 
to be disposed of is this : Does want, In the long run, drive 
the average man to work or to shirk work? Does work 
need to be* " Induced " out of a man; or Is it a natural phe- 
nomenon, the natural result of being fed and rested, 
needing only to be let out? 

Primarily, the* stimulus necessary to any action Is a 
psychic Impulse in that direction. When one Is hungry 
he tends to eat, not to work; when he is tired he tends to 
rest, not to make beds ; when he possesses surplus strength 
he tends to move about and do something. This rule 
applies throughout all life. The great bulk of all activity 
results from such Impulses. 

Quite incidental to this refaction is the purely Intellec- 



THE COST TO THE COMMUNITY 405 

tual observation that hunger, in order that It may be satis- 
fied the next time it arises, should serve as a signal for the 
direction of the next spontaneous impulse to do something 
into channels productive of food. But this conclusion of 
pure reason is removed from spontaneous naturalness by 
three distinct steps, namely: 

{a) It is useful only for the future. When one is 
hungry he not only feels no impulse to go to work and get 
something to eat; but, by all the canons of hygiene and 
anti-suicide, he ought to be allowed to do so. He ought 
first to be fed and rested until, the cycle having made 
another revolution, he feels- like working again. Then 
only is this ordinance of value, as a guide to that effort. 
Indeed, it is the honorable attempt to evade this natural 
fact which leads to so many broken good resolutions. 
When the pressure is upon one it Is easy enough to carry 
out this intellectual deduction to do differently next time; 
but when the time comes the action depends hardly at all 
upon previous conclusions as to desirability, but chiefly 
upon the fund of physical and moral strength available for 
immediate demand. 

{h) It depends upon the certainty, for this future con- 
tingency, that the work expended now will then bring 
back the desired result. Here is where the foundation 
goes out from under this entire philosophy, under present 
economic conditions. The larger part of Part I was 
devoted to showing how the prime characteristic of our 
present commercial civilization consists In the certainty on 
the part of the producer that he will have return to him 
only some thirty per cent, of his productivity, and the com- 
plete uncertainty on the part of the barterer as to what pro- 
portion will return to him at all. Indeed, It seems plain 
that this fact constitutes an all-essential step between the 
pressure of economic starvation or submergence, on the 



4o6 THE COST OF COMPETITION 

one hand, and that moral degeneracy which was ascribed 
to it as its effect in those pages. Mere momentary pres- 
sure of want or pain seldom drives men tO' the attitude of 
the criminal. We have plenty of evidence as to this from 
sailors cast away In open boats or from soldiers in battle 
or afterwards; although the former may become cannibals, 
for Instance, It is with a grave and deliberate sense of what 
they do, and It Is done with justice and impartiality. But 
let either continued Injustice or complete uncertanlty be a 
factor in the situation, let time do Its work, and men 
become demons. With the lower classes It Is their experi- 
ence, too often repeated, that faithful effort does not bring 
gratification tO' natural appetite which produces In them 
not only the unnatural appetite but the disposition to 
gratify even natural appetite vengefully, at someone else's 
cost rather than otherwise. With the upper classes It Is 
the element of chance In the distribution of the material 
rewards of life, now pouring out affluence with prodigal 
hand, now condemning to Immediate penury the nature 
long nurtured to luxury, which creates In these more 
prominent levels of society the public conscience of the 
gamester and the adventurer where should prevail the 
sobriety of the man certain of the fundaments of life. 

(c) The phenomenon Is purely intellectual. But when 
one Is under pressure of exhausted vitality the intellect does 
not work. The unconscious impulse then takes charge of 
the body and directs operations. Brute Instinct then 
replaces reason, — and, Indeed, to a better ultimate solution 
of the situation. Force cuts the Gordian knot which self- 
ish Intrigue had tied. The whirlwind springs from the 
seed wind-sown, and scours and cleanses an atmosphere 
choked with unjust and paralyzing dogma. 

Thus, secondarily to the primordial and direct Interac- 
tion between Impulse and deed, stimulus to action may be 



THE COST TO THE COMMUNITY 407 

derived more indirectly from the original sensation by an 
intermediate activity of the intellect. But all such sec- 
ondary transmutations of psychic energy, when compared 
with the primary impulse, are both weak and limited in 
duration. The man continuously without appetite may 
force himself to eat for a while; but he does not eat 
heartily, his food does not sustain him and he does not long 
continue to eat. Eventually the ability to force down food 
disappears and he succumbs. Nothing can help him 
but a natural appetite. And the same is true of his 
work. 

Widespread and prominent at present, among the men 
of education and power of the land, is the doctrine of the 
conservation of energy. The futility of the dreams of 
the inventors of perpetual motion is the subject of much 
preaching and not a little ridicule. More recently, indeed, 
has appeared and found wide favor the sermon against 
what has been called " perpetual motion of the second 
class," referring tO' the frequent attempts to bring about 
energetic phenomena without regard to the " Second Law " 
of energetics, without a drop in intensity of the energy of 
the primary form. But, strange to say, it is in these same 
walks of life that appears the most widespread worship of 
a doctrine which is fundamentally opposed to* and incon- 
sistent with both of these natural principles just mentioned. 
This doctrine Is the one which proclaims, as a natural 
fact, what is called the " free will " of man, or the power 
to choose otherwise than is dictated by the natural reaction 
of previously stored configuration to momentary environ- 
ment, otherwise than by natural law, otherwise than with 
psychic energy conserved, with psychic intensity depressed. 
This doctrine of the free power of the individual to choose 
amounts to nothing more than the belief that, although 
under this law of the conservation of energy must come not 



4o8 THE COST OF COMPETITION 

only every other living creature and inanimate object In 
the known universe, and each Impulse which leads either 
of them into any activity whatever, but also (so far as He 
has yet vouchsafed us evidence) the Supreme Power Him- 
self, yet that man stands out alone from all the rest of the 
universe in this respect. It Is almost universally believed 
that he can create both the impulse and the power within 
himself to do what he chooses, — or at least, even If he be 
limited in his ultimate degree or scale of powers, that he 
possesses the power to choose. 

Does he? This is the question which lies at the very 
foundation of modern social ethics. Viewed from purely 
ethical premises, as a matter of opinion, emotion, experi- 
ence, etc., It permits of endless discussion. Viewed from 
the standpoint of a Baconian philosophy, however, under 
the demand that it be In consistency with our many other 
never-to-be-surrendered deductions from laboratory and 
world experience, its answer Is as clean-cut as light and 
shadow. Individual will of choice is as much a natural 
phenomenon of an energetic character as is sunlight or 
electricity. It must fall just as Inevitably under the fun- 
damental laws of energetics. To doubt this Is supersti- 
tion, — an assumption outside the facts. If this be true, 
then "free " will (and this means the choice precedent to 
action, not the active impulse) cannot possibly be created 
from nothing, nor can it grow spontaneously from nothing. 
It can be created, and it can grow spontaneously after 
creation; but only as corn or aught else grows, after the 
planting of seed In a favorable environment, and by the 
absorption from that environment, to the last particle, of 
the materials of which it consists. Indeed, the only man- 
ner of Its "original " creation, as of any other thing organic 
or Inorganic, Is by the accordance to It of that favorable 
environment which will lead to growth. 



THE COST TO THE COMMUNITY 409 

When we wish to grow corn, for instance, do we find it 
sufficient, or even of assistance, to exert a downward pres- 
sure on the ground about where it is planted, with the Idea 
of forcing It out the faster? That method might pro- 
duce a fountain, but scarcely living corn. Yet this Is the 
method appHed to the human will by believers in the ethics 
of the present wage-system. Or do we, after the corn Is 
sprouted, erect a derrick-tackle and fall above It and pro- 
ceed to pull It upwards, that It may grow the faster? That 
will give us dead stumps, but scarcely living corn. Yet 
that Is the method of the university-settlement and the 
organized charities; It Is at least the method of many a 
pulpit. Or do we let the corn sow Itself from the stalk 
and then leave It there, saying: " Leave it alone. It can 
grow Itself If It only wants to. It Is none of our business. 
And besides. It won^t be worth anything unless It has to 
fight Its way up." Yes, that will produce corn; corn able 
to fight its way up, at least, corn such as the aborigines 
had, but not just the sort of corn expected of modern 
civilization ; and when we come to the eating of It, it devel- 
ops, to our sorrow, that its cultivation was Indeed our busi- 
ness, after all. 

All of these remarks apply without modification to the 
cultivation of the human will, and to the latter's choice 
between right and wrong. Each Is a natural organic 
phenomenon. Like all such, it will grow and flourish. 
Indeed It will insist upon doing so, from an Incentive 
Inherent within Itself and not possibly to be exaggerated 
by external, artificial means, until It meets the limit imposed 
upon It by Its environment; and that environment consists, 
In the present case, almost wholly of material supplies 
and artificial human relationships. It needs no coax- 
ing. Clumsy attempts at that only do It harm. If we are 
dissatisfied with Its progress our Indignation must be 



410 THE COST OF COMPETITION 

directed against the field which we have prepared for it, 
not against it. 

The explanation of this widespread inconsistency 
between our beliefs in material and In psychic energetics is 
fourfold. In the first place comes the general trend of 
human evolution in ethics, which appears so prominently 
in all human history: the fact that the race began the life 
which distinguishes It from the beasts, the life of imagina- 
tion and abstract idea, by baldly assuming that It was the 
center of the universe. In the beginning all things, appar- 
ently, centered about man. He was the object of all 
natural phenomena. The storms and earthquakes which 
harmed him were sent by deities Imbued with hatred and 
ferocity. The gentle rains and favoring breezes were the 
deeds of spirits kindly in their nature. The good deities 
bore the form of man at his best; the evil ones the appear- 
ance of man deformed by passion. All was purely per- 
sonal. So, since these gods were but men more human 
than men, more given to partial love or impartial hatred, 
more clumsy in their attempts at vengeful justice, man then 
stood to himself as not only the king of all creation, but as 
the creator of all current phenomena. The seasons made 
their rounds favorably or unfavorably, winds blew, disease 
arose or disappeared, war or peace held sway, according 
to whether man's free acts had pleased or angered these 
less than childish gods. And so, when he opened his 
eyes to the stars of the heavens as worlds outside our own, 
he assigned to them, most naturally, imaginary positions 
and orbits In a periphery of which the earth was a center. 
The entire astronomical philosophy which Copernicus and 
Galileo must overthrow before the wondrous fruits' of 
modern astronomy might be enjoyed was nothing more 
than a natural expression of this prehistoric racial assump- 
tion that, because sensation and consciousness lie near at 



THE COST TO THE COMMUNITY 411 

home to us, man must be first and free and all nature 
second and sequent. 

It seems scarcely worth while, and yet it is necessary, to 
call attention to the fact that the entire progress of human 
knowledge and power has been the result of the slow denial 
of this superstitious philosophy, step by step; of the slow 
reduction of man's earth from its assumed position as the 
center of the astral universe to its present acceptance as a 
mere speck of cosmic dust, lost to all vision from other 
worlds than ours, not in infinite darkness but in an immen- 
sity of light and of finite dimension inconceivably greater 
than it; of the more rapid but equally hard- fought reduc- 
tion of man himself from his ancient position as king and 
cause of gods, beasts and whirlwinds to his modern accept- 
ance as the latest result of a chain of natural evolution, of 
a chain beginning in purely inorganic forms of energy and 
passing through all the long series of lowly slimes and hor- 
rid beasts, through savagery itself, to the latest, the young- 
est and the most delicately balanced offspring of them all : 
Man and his Civilization. 

In the long war which scientific progress has waged 
throughout the centuries with this primordial superstition 
of the species, in order to bring out the truth, in order to 
confer upon man that power which is wielded only by 
humility, in order tO' force into slow human habits of 
thought the ingrained conception that mind possesses no 
power whatever over matter, but succeeds only as it obedi- 
ently follows matter's law-abiding activities, — in this long 
war waged for the good of the vanquished the last ditch 
to be fought is this last survival of the ancient superstition, 
this modern blind faith in the free autonomy of the human 
will. 

In the second place, viewing the situation more in the 
light of the particular questions of our own day and gener- 



412 THE COST OF COMPETITION 

ation, this belief finds support for its continuance in the 
fact that the average man very plainly does not possess 
sufficient initiative to develop the industry or the character 
or the something which Is plainly needed to bring to him a 
competence in life. We do not see that he Is already 
drudging at a rate of productivity several times as great 
as the income which he enjoys. We see only that, appar- 
ently, he does not do enough. We do not see that, no mat- 
ter how much more he may produce than now, barter will 
absorb and destroy the bulk of the increase, until it leaves 
him almost the same dull drudge as now. We call him 
lazy. Does that not mean that he lacks something, — 
something which has been squeezed out of him, drop by 
drop, while the rent and the interest and the dividends 
and the barter-cost were also being squeezed out of him? 
In the third place, the majority of those who speak so 
deprecatingly of the laziness and Improvidence of the 
laboring classes, and of the need for an inducement for 
them to work, cannot be listened to as impartial authori- 
ties; for they themselves belong to the bargaining class, 
usually as employers. The situation is then a palpable 
one, — and hardly to the barterer's credit, when once seen 
truly outlined. Since they receive, as gross profits, all 
which the laborer can be Induced to produce above the 
starvation-wage which will keep him on hand, of course he 
Is lazy ! It Is plain that he ought to do twice as much as 
he does; for would not the barterer then receive four 
times what he does now : the one-third of the original pro- 
duce plus the three-thirds of its duplication? It Is no 
reply to this to say that If the laborer's productivity Increase 
his wages will Increase.. The latter is thirty per cent, or 
less of the former. The employer may think that the 
Supreme Intelligience ought to have constructed laboring 
nature so that an Increase of three units of Income would 



THE COST TO THE COMMUNITY 413 

result, after complex and mysterious metabolism within 
the laborer, In an Increase of ten units in productivity, that 
the barterer might enjoy the other seven, or at least what 
Is left of it after barter-cost is paid. But it happens that 
the Supreme Intelligence does not act In that way. In 
fact, He Himself respects the law of the conservation of 
energy, and puts seed and opportunity in before He expects 
fruit to come out. Indeed, He even justifies the use of 
fertilizers ! Is It so wonderful, then, that from the ham- 
pering shackles of such a material necessity the employers 
of the land should not have found themselves entirely 
freed? 

In the fourth place, and of not the least significance, 
lies the fact that the energy involved In the human will is 
of a potential character and therefore, like all potential 
forms of energy, invisible except to the trained eye. Stored 
In each human organism Is a fund of potential will, char- 
acter, conscience, whatever you please to call it, which has 
been accumulated partly by the life of preceding genera- 
tions and partly by Its own life, — not put in by artificial 
human charity, whether organized or not, but absorbed 
Into itself from the soil, the air and the sun, by the mere 
fact of unconscious life and spontaneous growth. To the 
stock thus found upon the scene the life in question adds 
by accumulation or diminishes by dissipation only accord- 
ing to the simple fact of whether it receives more than it 
disburses or is forced to exert more than it receives. 

Under the stimulus of reason this fund of potential life- 
energy can be drawn upon to divert or stay in action the 
natural tendencies of life in the face of environment for a 
certain limited period. At the end of that time the resist- 
ance is gone, animal instinct resumes its sway and the life- 
action becomes again In all senses natural. Ten days in 
an open boat, they say, will make a cannibal of any man. 



414 THE COST OF COMPETITION 

Whoever has seen Miss Terry's impersonation of Mar- 
guerite before Fausfs casket of jewels has applauded a 
revelation of this process, the finest touch of the human in 
the entire play: The natural desire, the promptings of con- 
science, the self-reminders of rules of conduct learned by 
rote since infancy, the telling of the beads for protection 
from temptation: all ending in the inevitable surrender, 
"Oh! I should die if I didn't look! " All the criterions 
of art are based upon the recognition of the truth of her 
exclamation, that all that was strongest and best and truest 
in the character would actually have been dead, she would 
not have been worth looking at, had she succeeded in 
permanently overruling the natural impulses of her life by 
resource to artificial rules of propriety. 

So it is with labor. A man may force himself tO' work, 
for a longer or shorter but a strictly limited period, and 
with a limited efficiency, when he does not spontaneously 
desire work. He may work because he is hungry, or be- 
cause his family is hungry, or because his Sunday's sermon 
says that he ought ; but he does not do it long nor well. He 
is just as purely a pathological case as is the man who forces 
himself to eat without appetite. The man who doesn't 
like his work is just as sick as he who doesn't like his din- 
ner. Both, if they force themselves against their natural 
impulses, become as foolish and as ineffective as is any 
other sick man who tries to act like a well one. 

All work worth the doing, worth the world's apprecia- 
tion, capable of preservation and incorporation into the 
complete structure of the future, is done for the love of it. 
This ^' love " may be, in some classes of labor, most 
animal and monotonous in aspect. It may be stunted into 
mere physical habit. But, none the less, the work is done 
because the worker feels like doing it, or else it is not fit 
to keep : which goes to show, in part, how much of the 



THE COST TO THE COMMUNITY 415 

elaborate and pretentious pottering of the present genera- 
tion must be undone by the next before progress can be 
made. The greater and the more spontaneous the desire 
for work, the more unselfish and dehcate the character of 
the love of the doing, on the other hand, the greater and 
more permanent will be Its value. Work Inspired by 
desire for cash does not come under this head. 

Life Is commonly described as a little dally cycle, In 
which one does a little work that one may acquire a little 
money, to buy a little food, to eat which makes one a little 
sleepy, to gratify which arouses a little appetite, which 
calls for a little more work, etc., etc. That Is the com- 
monly and naturally accepted view of life, as It appears 
distorted In the turbulent, heated atmosphere of commer- 
cial competition In which we live. 

The picture Is half true. Life Is a cycle. Life moves 
In a dally round, which accomplishes nothing permanent 
which Is Immediately visible to the doer. Its reward Is 
solely the love of living. But the other half of the pic- 
ture Is false: In each pairing of cause and effect the cart 
has been placed before the horse. The true statement 
Is just the reverse: that one wakes In the morning with 
surplus energy calling for outlet; that the gratification 
of this Impulse creates both appetite and fatigue; that 
Incidentally, If justice prevail, the labor has made avail- 
able the means for gratifying both hunger and fatigue; 
and that their gratification with wholesome food and rest 
brings zest for more productive labor. Each act in turn 
is impelled by the preceding, not by the following, one 
of the cycle. 

Thus Is the cycle complete. It may be extended so as 
to bring In all the diversions and refinements of life; If 
each enter In proper proportion, the law of mutual 
Impulse holds good. The primary law of human, as of 



4i6 THE COST OF COMPETITION 

material, existence is that of the conservation of energy: 
Nothing can appear unless something else commensurate 
In quantity and quality has previously disappeared to fur- 
nish It. There can be no work done, no bread nor steam- 
yachts nor madonnas created, unless the human shell 
graven with the divine stamp has been previously sup- 
plied with a stock of energy to work with and upon. 
Schubert, for Instance, was denied this prerequisite; he 
starved to death at thirty-four. Who can measure what 
the world lost thereby? The dead past Is burled with Its 
dead. God will grow more Schuberts, or the equivalent. 
It Is man's prime business, now that he pretends to be 
civilized and Christian and (greatest pride of all!) effi- 
cient, to see to It that they are fed when born ; at least to 
see to it that they are not robbed. 

When the continuity of the cycle Is interrupted the 
Impulse to natural life becomes perverted Into Impulse to 
crime. The forcible removal of any portion throws the 
rest out of balance. For Instance, it Is plain that a man 
given opportunity, or required, to experience all of the 
other portions of life except sleeping would very quickly 
become 111 and not amenable to normal requirements. Not 
knowing the cause, his neighbors would call him at first 
Irritable, lazy and erratic; ultimately. If he had not 
already been imprisoned for crime, he would be adjudged 
Insane. And yet, all that he needed was the opportunity 
to round out his life-cycle Into balance. 

In the present discussion we are.concerned with the evil 
results of Interference with only two Items of the cycle : 
work, and the preservation to the laborer of the value of 
his product. All other factors, as they enter, will be 
treated as corollaries. 

From the economic discussion of Part I it became 



THE COST TO THE COMMUNITY 417 

clear that an inevitable feature of the competitive organiza- 
tion of society Is the enforced Idleness of a certain definite 
portion. To another portion is accorded less than the 
full value of Its productivity. To both, upon a differing 
scale, Is denied the proper food for life and growth: an 
Income commensurate with its natural individual produc- 
tivity. Therefore, while natural physical growth creates 
a continuous current of fresh life upward, from the lower 
to the upper levels of society, economic forces create a 
simultaneous, parallel, but downward, flow of life from 
the upper to the lower levels, to the starvation-wage level 
and ultimately Into the lowest level of all, that of the 
enforcedly Idle. Both economically and morally speak- 
ing, this flow Is from success down Into mere competency, 
from competency to Incompetency and from Incompetency 
to crime. 

Herein lies the key to the understanding of all crimi- 
nality. Here Is the raw material for the manufacture of 
criminals; men and women still unstarved, still retaining 
physical impulses: to eat, to rest, to be amused, to repro- 
duce ; yet all gratification denied them except that attained 
unlawfully. The wonder Is, not that there is so much 
crime, btit that there Is so little ! 

Just above this desperate class of the enforcedly idle 
lies the much larger one of the starvation-wage. They 
are not altogether desperate. They can exist, even 
honestly; but the existence is of the barest. Legal grati- 
fication of desire for aught but the necessaries Is denied. 
They are constantly under temptation. Natural desire 
for better things, sharp, raw hunger for things which they 
see possessed by others about them. Is crushed by contact 
with an artificial, Inflated institution. Is It so strange 
that the Institution should sometimes be punctured? To 
this class the conclusions to be drawn as applying to the 



4i8 THE COST OF COMPETITION 

enforcedly Idle apply with only less force. The differ- 
ence is In degree, not In kind. The temptation, the tend- 
ency, the inevitable result, are all there. The speed 
with which they act and react only is lessened. 

At the other end of the vertical scale of economic 
society exist men and women artificially tempted to little 
work and to overgratlfication. The actual competitors 
work hard enough, and hence contribute few of their 
members to the ranks of crime. But their families and 
their grandchildren, inheriting unearned ease and dis- 
torted appetite, with surplus cash to be gotten rid of, 
stand as the source of the temptation. The great bulk 
of existent crime is hired Into existence by this unearned 
surplus of cash accruing from past competition. 

It is a fundamental law of life, which can be stated 
only briefly here, that it Is elastic. Pressure upon It dis- 
torts it, but begets resistance. For instance, the fertility 
of the maple-tree or the salmon arouses wonder. Evolu- 
tionary science explains that the chances of survival of 
maple or salmon seed are so slight that this enormous 
fecundity is needed, to prevent extinction. It Is usually 
quite forgotten, among the laity, that, according to 
basic evolutionary law, the fecundity is there because It 
is created by the environment; that. In other words, what- 
ever may be the external chances against survival, they 
will exterminate all maples or salmon not exceeding them. 
Therefore, If the pressure against survival Increase, the 
fecundity will Increase; the fecundity can decrease only 
when the environment becomes more favorable. 

This law Is nowhere so well exemplified as in human 
life. As attention is turned from the levels of society 
where the chances of survival are more favorable to those 
where the pressure against life is more severe, there 



THE COST TO THE COMMUNITY 419 

becomes obvious a greater insistence upon survival, not 
only of the Individual but of the race. 

As to the Individual, for his self-preservation he becomes 
more brutal, more aggressive ; his finer parts are absorbed 
in an increase of animal strength and of combatlveness, 
in decrease of sensitiveness. He ceases to love peace and 
beauty; he prefers prize-fights. His instinctive percep- 
tion of the abstract rights of the more delicate to live are 
lost sight of In a concentration of all instinct Into an 
intense insistence upon self-preservation. An altruist of 
the highest order, as already pointed out, in his relations 
to his weaker fellows who are unable or unwilling to dis- 
pute his superiority, the slightest .aggressive affront from 
one possibly more powerful is resented with a violence 
characteristic of the .brute. 

As to the race, for its preservation the reproductive func- 
tions of the individual become more active and insistent. 
The great size of the average family of the lower classes 
has long been remarked; the too small size of the college- 
graduate's family is even now under public discussion. 

These facts are not only natural, they are wholesome 
and essential to the preservation of the race. They 
reveal stability of equilibrium. Otherwise, if adverse 
pressure did not increase resistance, the race would have 
already many times become extinct by accidental adversi- 
ties. But adverse, downward pressure does not exter- 
minate, still less elevate; it merely depresses, flattens and 
hardens the race, the better to resist. Well is it, indeed, 
for the twentieth-century worshipers of Art and Refine- 
ment that this process has ever been alert and active to 
a fair degree ; else the earth would now be circling through 
the seasons, even had the human race the proverbial nine 
lives, without its present load of Philistines, or of any 
one else. Overculture begets neither happiness nor chil- 



420 THE COST OF COMPETITION 

dren. But Superadversity begets children beyond normal 
need, that a surplus may be available for sacrifice. 

The light of this dual law will be turned upon the two 
most vital crimes of life : prostitution and murder. 

Prostitution, Of all crimes, prostitution comes first in 
importance. The factors entering into its prevalence are 
three in number : 

( 1 ) The greater activity of reproductive instinct in the 
depressed classes; 

(2) The presence of economic competition, of the star- 
vation-wage and of enforced idleness among women; 

(3) The presence of unearned surplus cash in the | 
hands of the underworked men of the upper economic 
classes. 

All of these forces are emphasized and aided by the 
general conditions of life economically resultant from 
competition, viz. : congested cities, factories operated at 
minimum cost, and slums. Other general physiological 
conditions, such as malnutrition, etc., resultant from the 
same origin, do the same. But these latter forces are not 
the initiative ones; they merely constitute a favorable 
environment. Their amelioration by other methods than 
the abolition of competition may slightly mitigate the . 
result, but it can do no more. f 

( I ) The greater natural activity of reproductive 
instinct in the lower classes is aided by the unnaturally 
close and miscellaneous mixing of the sexes in industrial 
and home life. This usually ignites the initial spark. 
The lack of attractive homes where the daughters of the 
family may receive young men, under the protection of 
proper surroundings, fans it into flame. The result is 
the creation of a current supply of girls whose hold upon 
better life has been weakened in the most natural and 
least blameworthy way: by seduction by a lover. The 



THE COST TO THE COMMUNITY 421 

couple may easily have been impetuous, rather than 
unprincipled. 

Much is contributed to the danger by the economic 
obstacles to marriage, by that delay which seems only 
wise (though it is not) when both parties already receive 
only the starvation-wage when single. It is this delay 
which the superciliousness of the more fortunate urges 
as a plain duty. 

It suffices to say that competition and the starvation- 
wage together offer every possible inducement against 
marriage. As holy matrimony is our highest and hap- 
piest gift from Heaven, so is it only natural that its 
assault by foolish human artific-e should be paid for with 
the highest price we have to give : the loss of true marriage 
and the substitution for it of animal intercourse. 

(2) The presence of enforced idleness among women, 
as among men, is the one greatest factor of all in the 
creation of prostitutes. When Mr. Parkhurst first 
exploded his invective against prostitution in New York 
City, Mr. Bellamy remarked, in his " New Nation,'* that 
whatever else Mr. Parkhurst might accomplish by success 
in his efforts, one thing which he was sure to do was to 
exterminate by starvation some thousands of women. 
There has never been said a more cogent word regarding 
the situation. 

Into the enforcedly idle class drop those least adapted 
to maintain themselves and their self-respect. Remember, 
always, that someone must drop there. A certain pro- 
portion of society is inevitably squ-eezed there by the 
bargaining in the upper classes. So it Is natural that, 
among the rest, come the unfortunates of paragraph i. 
The dishonored girl will not return to her family. She 
is usually not allowed to, even if willing. She can seldom 
find empoyment in the more creditable places, even were 



422 THE COST OF COMPETITION 

she otherwise fit for it. Begging is forbidden by law. 
So she must either starve or sell herself. 

See how she does it I Walk the streets of the larger 
cities at night. Enter some of the houses. Read the 
fearful revelations of New York's " Committee of 
Fifteen "! ^ Twenty-five cents a check she earns (if the 
barterers in prostitution do not take even that away from 
her) , and eighteen checks a night ! * Usually averaging, 
however, not so " well " as that! Read about the cadet- 
system : how young men in similar lack of employment, 
or finding the standard wage of the machine-shop less 
attractive than that to be won by traffic in prostitution, 
develop and exploit this traffic most thriftily. How, if 
supplies of fallen girls grow slack, they themselves seduce 
them; then, home being closed to them, the young men 
will supply a "home": food and shelter, such as it is; 
a wrapper and slippers to wear, so that the streets can- 
not be traversed for escape, were there any place to 
escape to ; also, the brass checks and the privilege of cash- 
ing them (at his own price) after board is paid. Each 
girl brings him forty dollars a week and upwards. Society 
offers to him no equal or parallel inducement to be honest, 
nor to her either. 

Such is the starvation-wage among the prostitutes. For 
the iron law of horizontal competition differentiates them 
as Impartially as it does wage-earners in any other line. 
Skilled effort in prostitution prevails to success, wins 
really an attractive mess of pottage for its soul. Average 
ability does less. If you doubt the presence also of the 
unemployed among the prostitutes, hopelessly below 
the level of all the rest, a tour of the Tenderloin and the 
missions any night, winter or summer, will reassure you. 

3 "The Social Evil." New York; G. P. Putnam's Sons, 1902. 

4 " A Fight for the City." By Alfred Hodder. The Outlook, Janu- 
ary 31, 1903, page 259. 



THE COST TO THE COMMUNITY 423 

Such is the kgitimate and rational fruit of the combina- 
tion of free barter and the free social contract: freedom 
to coerce. Truly, the expansive power of life Is shown 
never so clearly as here. That life will enter and persist 
wherever life, of whatever sort, is possible, we know; but 
it is hardly credible that such life is possible. It is, never- 
theless. It is the only one possible to permanently unem- 
ployed women. 

What problem is there here of psychic forces? Is this 
the field of admiration grown too rapturous, of hearts 
that love not wisely but too well? Is there any question 
of psychology here, any balance of will against sexual 
temptation? Not one whit. The temptation to the man 
comes from his surplus money and his idleness, not from 
the woman. That for the woman comes from her hunger 
and her weariness. Her very destitution and depression, 
according to all physiological psychology, should par- 
alyze her every atom of natural passion. It Is because, 
and solely because, her need Is for cash, because a cash 
price is set upon everything she needs, chiefly of all upon 
the right to work, that the sole temptation which the man 
has to offer, dead, asexual cash, appeals to her in her 
weakest spot, her sexless hunger of stomach, her Inward 
chill, her pride of appearance, and converts her most 
natural craving for good food, the first essential to 
regained strength, Into a pitfall for her further destruc- 
tion. The unnatural way in which the system of competi- 
tive barter artificially perverts the most natural and whole- 
some forces of human life Into destructive, demoralizing 
and tormenting ones is, I. repeat, fiendish in the Ingenuity 
and baffling complexity of Its cruelty, and it is no where 
so well exemplified as in Its pressure upon the prostitute. 

Oh, ye proud Captains of Industry, organizers of 
armies of working men and women (with a main eye to 



424 THE COST OF COMPETITION 

a lion's share of what they produce) ; ye promoters and 
financiers, fighting over the spoils squeezed out of the 
lean millions; oh, all ye good and commonplace people, 
unable to be captains of industry but wishing that ye 
might be, admiring their gold-lace and trappings, covet- 
ing their privileges, upholding the whole organization 
and its objects as the only good and possible ones: — will 
ye not even stop and ask why it all is? Cannot ye see 
that when once a price is placed upon labor and upon the 
chance to labor, when all prices are made the toy of bar- 
ter and intrigue, when once the sacred day's-work is pros- 
tituted to the level of the dollar, that with it to the auc- 
tion-desk goes everything that a day covers on God's foot- 
stool here below, — not only life itself, but those things 
which are better than life: manly honor and w^omanly 
modesty, domestic love and the hearthstone on which the 
state is founded? 

Yet what are the remedies suggested for all this mess 
by the Committee of Fifteen (noble souls! striving 
seriously enough to clean the national cesspool), or by 
anyone else? Read all of the books upon prostitution. 
Of what do they prate ? License or prohibition, medical 
inspection, mission-work or moral suasion! How much 
recognition is there here of cause and effect, of prevention 
being easier and cheaper than modification, of asepsis 
being better than even cured disease? How commen- 
surate are they with the magnitude and forcefulness of 
the evil? Their best possible hope is to stupefy or con- 
ceal, or to cajole the devil into departing, with a loud 
noise, like an Indian medicine-man : brown-sugar pills for 
cancer of the stomach, morphine and Christian Science to 
alleviate starvation! Is this Anglo-Saxon directness, 
courage and efficiency? Are you afraid to condemn and 
attack barter as the cause of it all, — universal enough, 



THE COST TO THE COMMUNITY 425 

energetic enough, insidious enough and evil enough, alone 
of all other institutions, to explain the trouble, — just 
because it is time-honored by the older world, and 
defended by the Ancient and Honourable Pop-gun 
Company? 

So goes the bedizened woman, so often not even bediz- 
ened: draggled and unkempt and blear-eyed rather, with 
raucous voice, radiating silliness and vacuity with each 
blaspheming word. How about the gilded youth who 
goes with her? 

(3) To the mass of enforcedly idle women crowded 
into too miscellaneous contact with mankind in the rnodern 
city comes the surplus cash of the winners as oil into 
air heated by compression. The temperature already 
acquired is tremendously augmented. To the current of 
womanhood flowing downward into the depths because 
the higher levels are untenable is added another, though 
a smaller one, moved in the same direction by the super- 
ficial gilding of the lower levels by the cash-fattened 
youth. If starving womankind might merely feed and 
clothe itself by sale of soul, the result were bad enough. 
But when she can add to this the luxury and dissipation, 
in mimicry often not too grotesque or far-fetched of the 
lives led and vaunted by the successful woman as the best 
of life, it is far worse. It is what we see all about us: 
harlots in the highest places in the economic scale. That 
there should be so much mere dissipation of wealth by 
competition as there is, is a national calamity. But that 
so much of this wasted wealth should go to purchase 
blasting-powder with which to undermine that founda- 
tion of the state : the family and the home, is a worse one. 
It is the highest possible indictment against the competi- 
tive system which it is possible to bring. 



426 THE COST OF COMPETITION 

Murder. — Of the cause of the other of the two capital 
crimes taken as Illustrative: murder, with its twin- 
brother, suicide, much that has already been said applies 
equally. 

Murder Is associated almost always with one or the 
other of two passions: avarice or jealousy. Jealousy 
finds its origin in much the same forces as does prostitu- 
tion: the exaggeration of sexual Instinct, the lack of 
opportunity for deliberate acquaintance and courtship 
under proper conditions, the obstacles to prompt marriage 
and the general lack of home-atmosphere in the barracks 
called tenements and apartments in modern city-life. 

The avarice just mentioned is more often the real and 
desperate need of the lower classes than it is properly 
what the word signifies. True avarice will make a miser 
of a man, but not a murderer. After all that has been 
said of the pressure upon men for work and for proper 
return from their work due to competition, little need be 
added here to show Its direct connection with assault and 
murder. With the starvation-wage class there Is tempta- 
tion enough; with the submerged tenth the wonder only 
is that there Is not complete revolt and anarchy. Instead 
of merely occasional assassination. It is astounding how 
many there are who are content to sink into the hospitals, 
asylums and poor-houses unavenged. 

Both of these forces are emphasized and given direc- 
tion by the aggressive brutality which has been pointed 
out as an inevitable result of the repression of life. In 
addition comes the Influence of example. Disguised by 
solemn pretense as It ma.y be, the tribunal of competition 
is force, the law of price-making Is anarchy (no-law). 
The soul of commercialism is might; its operation Is 
economic violence ; its fruit Is physical hardship, even unto 
death. High-priced wheat and coal and ice are Its off- 



THE COST TO THE COMMUNITY 427 

spring and increased death-rates its natural progeny. The 
lower classes feel this, in their bones, more keenly and 
accurately than the upper classes can read it from books. 
They are on the firing-line; and on the firing-line one is 
not always careful, after generations, as to one's aim: let 
only it be assured that ball-cartridges are used and that 
someone besides self gets hurt. 

Let him who doubts all this but read the daily papers. 
Take assault after assault, check off the murders, count up 
the suicides, if you can. See how few of them fail to 
reveal the direct result of competition: either a job lost 
or one never found; unfortunate or too fortunate specula- 
tion ; securities turned to worthless paper, or none to turn 
worthless ; or just plain, hungry robbery. 

There is no need for more mysterious explanation of 
these simple, bold phenomena. We have too long sought 
to entangle our minds and consciences in an intricacy of 
psychological reactions which we can neither define, fol- 
low nor understand. We have too much faith in the per- 
sistence of the " criminal type," as a distinct variety of the 
species homo which survives all attempt at outbreeding. 
There is no " criminal type," as a separate race of men. 
Man undergoes natural metamorphosis, under pressure of 
environment, more readily than does any other form of 
life. As vegetable cells become specialized, under outside 
pressure, Into the most varied duties, and different members 
of the plant become leaves, rootlets, petals, stamens, etc., 
upon demand, for the good of the entire mass, so does 
divine human nature, equally elastic, intelligent and sub- 
servient, turn millionaire or murderer, statesman or walk- 
ing-delegate, at the behest of the community and Its insti- 
tutions, with no fundamental abandonment of its original 
characteristics. And some day we shall see, much more 
plainly than is possible in the midst of the present confu- 



428 THE COST OF COMPETITION 

sion, that each of these, its most diverse specializations of 
the race, is laboring equally, under divine guidance, one by 
propulsion and another by protest, the one as driver 
and the other as brake, the one as rail and the other 
as wheel, for the guidance of the grinding growth of human 
institutions into the path of that ultimate perfection and 
power which is not to be reached by any more royal road. 

Read what Professor Edward A. Spitzka, of Columbia 
University, has to say of the " criminal type." In an 
address ^ delivered at the opening of the present year he 
declared that " after a thorough study and investigation 
of several years he had concluded that crime could not be 
attributed to any deficiency of the brain. The study of 
criminals does not necessarily tend to establish a criminal 
type or anything else maintained by the Lombroso school. 

" Many criminals show not a single anomaly in their 
physical or mental makeup, while many persons with 
marked evidences of morphological aberration have never 
exhibited the criminal tendency. Every attempt to prove 
crime to be due to a constitution peculiar only to criminals 
has failed finally. It is because most criminals are drawn 
into the ranks of the low, the degraded, the outcast that 
investigators were ever deceived into attempting to set up 
a type of criminals. The social conditions which foster 
the great majority of crimes are more needful of study and 
improvement; by this means only will crime become less 
prevalent throughout the world." 

Corruption 

These considerations bring one directly into the topic 
of crime of a purely mercenary order, untainted by physical 
violence. In this class of overtemptation, when closely 

5 Quoted in the language of The Search-Light for January 7, 1905. 



THE COST TO THE COMMUNITY 429 

examined, there fails to appear any natural basis for the 
artificial distinction between men employed in public or 
In private service. There appears to be as much defal- 
cation in private as In public. In the latter it Is the prime 
duty of the authorities in power to spread all the evidence 
before the public, which is both nominally and actually the 
employer. In the former it is the prime duty of the 
powers to keep the matter quiet and out of the courts, if 
possible ; for the public is not nominally, though really, the 
employer. So we hear less of It. In regard to mercen- 
ary crime against the community other than mere defalca- 
tion the following contrast throws the highest light. 

The making of private profit while in public service Is 
nominally a gross crime. In commercialism the making 
of private profit in public service Is the sole object of organ- 
ization. Success at It Is lauded, not blamed. 

A business which supplies to the people a wide need, 
a need which the individual citizen cannot efficiently supply 
himself, performs a public, not a private, service. The 
fact that It is called a private business does not by one whit 
alter the true situation. Nor does the fact that a citizen 
possesses a degree of choice between more than one depart- 
ment of that service, each called, for profit^s sake, a com- 
peting private business and all more or less In collusion 
with one another, alter the situation In essential. There 
has been no illegal corruption in public office yet revealed 
which equals in enormity the continuous, legal robbery of 
the people by the corporations organized for that purpose 
under the guise of doing something else, — ^the supplying 
of oil, meat, transportation, etc. For the corporation 
does not perform the service. A $5000-superIntendent 
takes complete care of that. The corporation busies Itself 
solely with seeing that the dividends come in. When It 
becomes possible to Increase the dividends by means of a 



430 THE COST OF COMPETITION 

diminution, or even a complete cessation, of service, as has 
frequently been the case, it shows not the slighest reluc- 
tance to the adoption of that policy. The object of incor- 
poration is the making of profit, not the performance of 
service. In every case, the dividends are the prime object, 
the service a secondary and a purely Incidental necessity. 

The public departments In which the greatest scandals 
have developed are still able to perform their services at a 
much lower total cost to the public than are the private 
corporations, with their enormous " cost of doing busi- 
ness " ; for if you charge against the post-office Its occa- 
sional deficit (averaging zero) you must also consider the 
egregious charges sent against the taxpayer by the great 
corporations : the tariff, the militia and the civil law. In 
public office defalcation of the people's money Is Incidental; 
in private office It is fundamental. In public office It Is 
carried on with mediocre ability; In private office it absorbs 
the talent of the ablest in the land.^ 

Indeed It might be expected, a priori, that an Institution 
so fundamentally diffused throughout and absorbed by the 
people as that of commercial competition should pay no 
attention to boundaries so artificial as the distinctions 
between the so-called public and private services. Both 
classes of service supply to the people absolute needs. 
Both organize and employ therefor the strength of many 
workers. Both need capital for their prosecution. Both 
draw all of their support from the pockets of the people. 
Distinction between the two based upon characteristic dif- 
ferences in the thing supplied it is Impossible to descry. 
The very wide difference between the two as to the manner 
of their conduct It is our present business to make clear. 

The wonder Is, therefore, that until fairly recently 

6 For a wide discussion of this relationship between public costs and 
public ethics, see page 533, and following. 



THE COST TO THE COMMUNITY 431 

profit-seeking has kept Itself comparatively clear of the 
public services which are called by that name, and has con- 
fined Itself to those still masquerading under the name of 
private business. But at no previous time In the world's 
history and In no other land has man been so free to 
Indulge In competitive effort as in America to-day. There 
Is no other land In which the phenomena which are here 
being pointed out as peculiarly the result of commercial 
competition are so common or so well developed. There- 
fore It Is In America that the pressure visible In lack of 
other employment and In the rapid congestion of all other 
fields of profit-seeking, have besieged the public offices for 
admission Into that field of opportunity for profit-making, 
far too closely for successful resistance. Given : 

( 1 ) A current supply of men, capable men, in want of 
work or of more remunerative work: 

(2) A field of effort, viz.: public office, so closely in 
contact with and dependent upon profit-making cor- 
porations for Its daily effectiveness that it Is fecund 
with opportunities for private profit ; and 

(3) The universal example, in every other department 
of industry and commerce, of profit-seeking at the 
expense of the community applauded and rewarded 
by the humbugged public; and 

(4) That frailty of human nature to which the opti- 
mistic reformer is so often referred for enlighten- 
ment as to the futility of his hopes; 

Given these things, and how long could public office pos- 
sibly be expected to remain clean? Its development into 
a maximum productivity of private profit Is as natural as 
the development of a virgin mine-property into the same 
civilized condition. Patriotism and public spirit, outraged 
at every turn by profit-seeking under any name, may stand 
aghast; they can accomplish nothing reformatory by strain- 



432 THE COST OF COMPETITION 

Ing at the gnat in the post-office scandals while it calmly 
swallows the enormous camel visible in the profits of the 
trusts and the transportation-companies. The public 
cheerfully pays incomes ranging upwards to millions to 
individuals concerned in the public supply of steel, coal, 
oil and transportation; the same to those merely owning 
building-sites, performing no service whatever. To the 
chief executive of the entire nation it pays $50,000, and 
expects him to reexpend that during his term of office. 
Would it be so unnatural if he should feel that his services 
were of equal worth and importance to the nation with 
those of Mr. Rockefeller or Mr. Carnegie, for instance, 
and that he should retire, after each administration, with 
at least a few millions made out of his incumbency ? What 
if every petty official, whether federal, state or city, made 
out of his office, not only what he does make in the corrupt 
cases, but ten times more ? These offices would even then 
not cost us so much as do the services of individuals of 
similar importance in private business, in profit made and 
strength lost in competition, in " cost of doing business." 
Suppose that we paid public salaries as great as that, should 
we not then at least have an efficiency of public service as 
great as that in private business: well-chosen, well-disci- 
plined assistants, not allowed to steal; or at any rate, no 
more than so much, — as is now the case in all great busi- 
nesses and in Philadelphia's " most perfect " machine? 

The problem is of such importance as to be worth 
restating: for a problem rightly stated is half solved. 
Given : 

(i) The public support of an arrangement which 
reduces the opportunity for employment from a 
natural surplus to an artificial deficit, so that the 
man seeks employment instead of the employment 
seeking the man; 



THE COST TO THE COMMUNITY 433 

(2) Which reduces all questions of choice of employ- 
ment, even in the minds of the leaders of men, to 
one of comparative pecuniary reward, and which 
measures not only success, but the bare right to 
exist by the individual's willingness and ability 
to force money from other pockets into his own ; 

(3) Which allots the greatest and the most reliable 
pecuniary rewards, in the form of profits, to those 
engaged in barter and the smallest and most uncer- 
tain, in the form of visible fixed salaries or wages, 
to those engaged in production of value to the 
community ; 

(4) Which presents a fertile field for the exaggeration 
of those private profits by the influence, or even the 
absolute control, of legislation or of its judicial 
interpretation; 

Given, I say, these fixed premises, rigidly enforced by a 
democratic people in its popular support of a competitive 
system of wealth-distribution, and no other logical result 
can possibly be deduced than the wide prevalence of profit- 
seeking and profit-making in public service, upon an enor- 
mous, typically American scale. 

To him who cares nothing for empty formulae, but deals 
with natural realities, public service is a public service, no 
matter what its name. The making of private profit in 
the alleged protection of the community from cold or 
hunger can never be argued by the theorists into anything 
different in principle from the making of private profit 
in the alleged protection of the community from vice and 
crime. The underlying principle is exactly the same. 
The results are the same: the protection in the two cases 
equally fails to be an efficient protection so soon as the 
element of private profit enters. The heads of the two 
services and their underlings are equally exposed to a 



434 THE COST OF COMPETITION 

temptation too strong for human nature to withstand. 
The community is equally corrupted by the spectacled 

The efficiency of service is equally ruined: our supplies 
of coal and transportation are as far from being what 
they ought to and might be as are our supplies of muni- 
cipal administration and police protection. The reasons 
therefor are the same and are mutually reactive. If the 
community reward Rockefeller with millions for follow- 
ing his methods of public exploitation, how can it blame 
Machen for seeking thousands by the same methods? 
How, in the name of common sense, can It be puzzled 
by the fact that Machen does follow them? 

These are the well-springs of public corruption. We 
may disbelieve and delay and squirm out of the failure of 
one compromise, only to wriggle Into the trap of another, 
as we will. The springs cannot be sealed from the out- 
side. They will continue to flow, — or worse, to make a 

7 Mr. W. A. White, writing in the September (1904) issue of 
McClure's Magazine, of the postal frauds, says : " Of the thirty- four 
thousand office-holders in the town [W^ashington] not five hundred look 
upon their offices as sacred trusts to the people. Anything which the mass 
of those Washington office-holders can get out of the government is re- 
garded by public opinion among them as clear gain, whether it be an 
hour's time or a railroad-pass for betraying the government's interest in 
matters under their care. The man who is making * easy money ' off 
the government ... is looked up to with a kind of envious respect." 
Is not this exactly the ethics of the outside commercial world, only slightly 
purer? Out of any thirty-four thousand business-men are there so many 
as five hundred, or even five, who look upon their service to the community 
as a public trust. And yet what else can you make of it than a public 
trust? Are not the ethics of corruption exactly those of lynching, and 
the cure the same: that the community cannot expect the common 
herd to respect a written or an unwritten law which public opinion does 
not equally impose upon the masters. The negroes will not cease breaking 
the law until the whites do the same. The governmental officials cannot 
be expected to refrain from making all they can out of the government, 
which is the people, until the captains and privates of commerce are 
rebuked for making all they can out of the people, which is the govern- 
ment. 



THE COST TO THE COMMUNITY 435 

soggy marsh of our fair land, — until we go to the bot- 
tom of the matter. When the sale of a thing at more 
than its cost of production is regarded as public treason, 
and is prevented by the sale of all things at cost by salaried 
public servants, then, and not before, will corruption dis- 
appear from public office. 

Is it any wonder that the populace is supine in the face 
of corruption, that St. Louis is not ashamed of her politi- 
cal machine and that Philadelphia was proud of hers? 
Does it see aught going on in the offices of City Hall that 
it does not see in any business-office: inflation, under- 
bidding, subletting, doctoring books, stuffed or dummy 
directorates, paper corporations, purchase or sale of in- 
fluence, etc., etc.? Mr. Steffins, in the St. Louis number 
of his splendid series of revelations of municipal corrup- 
tion, says: "The convicted boodlers have described the 
system to me. There was no politics in it, — only 
business." 

. The suggestion that salaried public officials would be 
more efficient, for any public service, than the present 
private ones invariably raises the cry : " Think how 
politics and corruption would enter! " There is now in 
it much business and little politics. There would then be 
more politics, perhaps, but surely less business : an Infinite 
gain to the better ! 

Such are the real causes of corruption in public office: 
the naturally close affiliation between the public services 
which are called public and those arbitrarily called 
private, the natural similarity of profit-making in either, 
and the consequent natural inability on the part of the 
people to curb one while failing to curb the other. Be- 
cause the only difference between the two is the artificial 
one of name, because all the material penalties which 



436 THE COST OF COMPETITION 

profit-seeking precipitates upon the community are greater 
in the case of private than of public office, the common 
people will always fail to sense any broad distinction. 
They enter a prosperous store, a lawyer's office or a bank 
to transact its regular business in exactly the same mood 
in which they enter a police-office to buy license for vice: 
with the feeling that they are paying an exorbitant price 
for a thing which they do not want but which they are 
required to have in order to prosecute their daily avoca- 
tion. The insignia are the same: mahogany furniture, 
plate-glass, enormous ledgers and forbidding-looking 
safes; the results are the same. They perceive, much 
more clearly than do the economists, that their hard earn- 
ings pay for it all. 

When a street is repaved it furnishes them with work. 
If the paving were unnecessary, it appears to them only the 
more clearly in the light of a boon, fallen from an admin- 
istration exceptionally capable and benevolent. If the 
cost to the taxpayers be high because a thousand was spent 
upon the city council in securing exemption from competi- 
tion, why is it worse, they ask, than if the thousand were 
spent in competition? I also ask "Why?" Certainly 
true is this : that the thousand would not have been spent 
in purchasing exemption from competition if success in 
competition did not cost much more. 

But the connection between profit-seeking and corrup- 
tion in public office is also more direct than merely by 
public example. Corruption is merely one phase of com- 
petition. Nearly all businesses need, in their operation 
or for their more profitable operation, privileges, permits, 
franchises, licenses, tariffs, subsidies., etc., which the 
government alone can grant and which it is legal for them 
to have. Illegal favoritism can also enhance profits: 
immunity from taxation, from arrest for defying the 



THE COST TO THE COMMUNITY 437 

burdensome restriction of the law, monopoly of city con- 
tracts, etc. The corruption in each city, different from 
that in all of the rest, reveals the systematic exploitation 
of some one of these lines. In Minneapolis it was free- 
dom from arrest for profit-making vice; in St. Louis the 
sale of special privileges for profit-making; in Pittsburgh 
and Philadelphia the farming of artificial monopolies. In 
no case is the corruption confined solely to these single 
lines ; but the general differences between the cities rest 
upon business, rather than upon political, distinctions. 

The search after these aids in profit-making is exactly 
parallel with the search after any other such aids: a wider 
market, a better price, a cheaper supply of raw material 
or labor. The cost of initiating corruption, in legal 
counsel, bribes, bonuses, etc., is charged to the same 
general accounts upon the ledger as is the cost of doing 
business : the employment of commercial travelers or the 
fees for advertising-space. In the mind of the business- 
man it is morally excused by the same necessity. Of all 
the revelations of current public shame made popularly 
public during the past year,^ — most notably in connection 
with the coal-strike, in Mr. Kennan's "Holding up a 
State " and Mr. Hodder's " A Fight for the City," in 
The Outlook, and in the articles by Miss Tarbell and Mr. 
Steffins in McClure's Magazine,— the greatest shame does 
not by any means fall upon the public officials ; it is upon 
the business-men who bought them. Some were conscious 
of their guilt; they subscribed freely to the funds of the 
reform-associations, but they would not permit the use of 
their names, — worth far more than their dollars, — for 
fear of harming their business; for business always 

8 1903-3. Nothing could better instance this same identity of "business" 
-with the corruption of legislation, if not with sheer peculation, than the 
mutual insurance methods revealed since these lines were written. 



438 THE COST OF COMPETITION 

antagonizes patriotism. Others were worse In fact, 
though more excusable In spirit. They regarded the pur- 
chase of the " influence " of public officials as a necessary 
and legitimate part of doing business.^ There is plenty 
of excuse for this, in fact, if not in principle. Private 
competition is full of this same sort of effort: the intrigu- 
ing for or the downright purchase of private Influence, the 
offering of bribes, the forging of dummy contracts, *' cut- 
ting up the back," taking business nominally at one figure 
and actually at another, combining Into pools, agreements, 
etc., forming rings within and about rings, each undermin- 
ing the other. All of this pictures fairly the low ethical 
standards of competitive effort. To ask, then, the man 
who has been brought up amidst and educated and sup- 
ported by such work throughout his entire life to fail to 
apply it to its most lucrative field: public corruption, to 
ask him even to stand broadly and effectively for Its eradi- 
cation, as a pestilential thing, from our community-life, is 
placing a strain both upon his understanding and his 
patriotism to which human nature is naturally quite 
unequal. 

All corruption originates in one of two places : 
(i) In the profits of otherwise legal business; 
(2) In the profits of hired vice, 

9 One incident will show how widespread and insidious is the evil of 
this misconception. At one of the discussion-suppers of the Worcester 
Economic Club, including in its membership the best citizens of the Heart 
of the Commonwealth, a representative of the department of economics of 
Harvard University, in speaking to the relation between private business 
and public corruption, said solemnly: " Gentlemen, if I, in search of a 
legal franchise, had made every honest effort to secure it, had paid my 
way honestly, and found it finally blocked by a public official, elected by 
the people, who insisted upon being bought, why, I'd buy him!" It is re- 
freshing to add that the only case that evening of the spontaneous inter- 
ruption of a speaker by universal applause was when a later speaker 
rebuked this attitude by the enunciation of the principle that in the cor- 
ruption of public officials the guilt of the tempter was far greater than that 
of the tempted. 



THE COST TO THE COMMUNITY 439 

Of the two the former Is incomparably the greater. Of 
Pittsburgh Mr. Steffins says: "The railroads began the 
corruption of this city." Of New York Mr. Jerome 
says: " This avowed support of Tammany by the Met- 
ropolitan Street Railway Company comes just in time to 
show the blindest who the friends of Tammany really 
are. The grafter never yet was working in the interest of 
the poor and honest man; he is certain to be working in the 
interest of the man who has the stuff." And the " stuff " 
is the profits made out of the people by private corpora- 
tions in public services. 

Of St. Louis Mr. Steffins says, in speaking of the politi- 
cal boss, Butler: "His business was boodling, 
the stock-in-trade of the boodler is the rights, privileges, 
franchises and real property of the city, and his source of 
corruption is the top, not the bottom, of society. '^ ^^ " The 
boodlers told me that, according to the tradition of their 
combine, there * always was boodling in St. Louis.' But- 
ler organized and systematized and developed it into a 
regular financial institution, and made of it an integral part 
of the business of the community. He had for clients, 
regular or occasional, bankers and promoters; and the 
statements of boodlers, not yet on record, allege that every 
transportation and public convenience company that 
touches St. Louis had dealings with Butler's combine. 
And my best information is that these interests were not 
victims. Blackmail came In time, but In the beginning 
they originated the schemes of loot and started Butler on 
his career, 

" Robert M. Snyder, a capitalist and promoter, of New 
York and Kansas City, came into St. Louis with a traction- 
proposition. . . . Snyder paid $250,000 for the 
franchise, and as Butler and his backers [the street-railway 
interests already installed] had paid only $175,000 to beat 

10 The italics are mine. 



440 THE COST OF COMPETITION 

it, the franchise was passed. Snyder turned around and 
sold it to his old opponents for $1,250,000. It was worth 
twice as much." 

Is there here any doubt as to the origin and cause of the 
immorality? Is not the political boss most plainly a 
protege, an offspring, of the relegation of public services 
to private profit-making? Is it not unutterably plain at 
last that the pitch with which all are defiled is these same 
profits, that without their artificial attachment to the service 
neither the bribing corporation-official, of principal guilt, 
nor the bribed government-official, of secondary guilt, 
would touch the business? It is said so often and so easily 
that to hand over a public service to the public servants 
would be to pile up corruption. If it were done even 
upon the public understanding that they were not to con- 
duct it at cost, as honest public servants, responsible to the 
people, but that they were to make out of it all they possi- 
bly could, — the policy plainly allotted to the private cor- 
porations, — the service would not cost what it does now; 
for now the profits must not only feed just these same 
political people, but all the corporation-officials and stock- 
holders in addition, a double set of leeches ; and the second 
set not in any effective way limited by public opinion as to 
the amount of their blood-suction, but rather praised and 
run after for their excesses, for their very visible blood- 
distended corpulence and opulence. 

But if the service were handed over to the public 
servants upon the public understanding that it is to be con- 
ducted at cost, at the worst there would be but one set of 
leeches to feed and watch; and except by pure embezzle- 
ment they could get nothing. If the accounts were public, 
and only in public services organized as such is compulsory 
publicity practicable, it would soon be visible if the service 
were conducted at more than cost. In the post-office, with 



THE COST TO THE COMMUNITY 441 

all Its frauds, the amount of money lost before the pecula- 
tion is discovered is insignificant.^^ And if the service be 
conducted at cost the fodder for the political bosses is 
wanting. If the workingmen of his ward all have jobs 
seeking them, enforced idleness and starvation-wages being 
no more, his tools are all dulled. Is it not plain that no 
one wishes to touch a cost-operated service except the man 
seeking to exchange an honest day's work for an honest 
day's pay? Neither the brazen captains of Industry nor 
their hired assassins of public morals will have any of^ it. 
Nor can the unscrupulous gain anything by injecting 
into a public service which is conducted nominally at cost a 
concealed profit. It cannot reach their pockets If tried. 
The handling of the funds by a separate organization ac- 
complishes that automatically. The same precaution Is 

11 These post-office scandals, instead of standing as evidence against 
the wisdom of public ownership or operation, illustrate the very point 
which we wish to prove: that so long as any profit-seeking corporations 
exist no public service can possibly be perfectly pure. In them, as in all 
the other instances cited, the source of the temptation to corruption, and 
the opportunity for its exercise, is the legally honest profit-making field 
outside of the governmental organization. Therefore the writer preaches 
not at all that all governmental enterprise may be expected to be pure, 
whether its territory be expanded or restricted; but that it must always 
be expected to be impure, in exact proportion to the amount of commer- 
cial, competitive profit-seeking which is abroad in the land. Therefore 
the transfer of each service in turn from private to public hands will con- 
stitute a real gain to the community only in so far as it restricts the volume 
of private profit-seeking outside the government. In order to accomplish 
this end the governmental absorption of services must 

(i)Proceed as rapidly as does the expansion of new fields of oppor- 
tunity by the progress of inventive science (and it is now proceeding more 
slowly than that) ; and . . 

(2) Must be consciously undertaken for the purpose of attaining a serv- 
ice performed at cost. Otherwise, that is, if profit is to be sought, it 
makes little difference whether any particular service be nominally in 
public or in private hands. In the latter case the people will be robbed 
of more cash and will suffer more ethical degeneration of individuals and 
of community-standards; but of neither will they be so painfully conscious 
as in the former case. 



442 THE COST OF COMPETITION 

effective in all corporate, profit-making services which are 
operated in the interests of the stockholder: the profit is 
sought, the prices are made and gained, by one organiza- 
tion, the selling one ; the funds are handled and accounted 
by a quite distinct one. The history of the post-office, 
for instance of a public service publicly managed, evinces 
this fact. There has been plenty of plain peculation, but 
there has been no effort made, nor is any imaginable, 
toward the illegal acquisition of moneys by forcing the 
selling-price of postage above the cost. The history of 
the Philadelphia gas-works reveals the same state of 
affairs. So long as it was publicly owned and operated, 
Philadelphia's most unscrupulous political machine could 
do nothing to extract boodle from it. All that they could 
and did do was to surreptitiously, and yet flagrantly, force 
up the labor-cost and neglect and depreciate the works 
themselves, so as to bring public ownership into disrepute 
and thus lead to the lease of the works back Into private, 
profit-seeking hands. ^^ 

12 For the history of these matters, see the pamphlet upon the subject 
by Mr. Acker. The feature of greatest interest in this connection is the 
readiness of Mr. Wanamaker to take over the gas-works and operate 
them for the city (since they were to be lost to the city anyhow) upon a 
basis very much more favorable to the citizens than that secured to the 
successful bidder by the machine. It was because he was public-spirited 
that he failed. It was because he proposed to furnish gas practically at 
cost, with the elimination of all but nominal profits, that the political 
bosses would not allow him to get the honorable opportunity. 

The final act in this long farce-drama of wolf-in-sheep's-clothing, the 
recent effort of the United Gas Improvement Company and its allies to 
secure the lease of the gas-works from the city-government for a long term 
of years at an absurdly low price, with the cloudburst of public indigna- 
tion which formed its anti-climax, is too fresh in the minds of our readers 
to need review here. As a bald instance of the natural desire of both the 
profit-gatherers and the political machine to convert every tool possible 
away from use upon the sale-at-cost plan to the profit-tax plan, the inci- 
dent has been unsurpassed. If there be any sober mind in the country 
which still questions this final and complete identification between the profit- 
seeker and the corruptionist, he will never be converted to the plain lesson 
of fact. 



THE COST TO THE COMMUNITY 443 

It Is not the temptation to simple thievery Involved In 
the public ownership and operation of public services 
which frail human nature cannot withstand, but the enor- 
mously greater temptation to profit-squeezing out of the 
public, to any extent and at the cost of the public being 
squeezed, before which it inevitably falls. The cartoons 
of the United States or local treasuries opened up to pecu- 
lation under the banner : " The lid's off. Come on, boys ! " 
cannot more than suggest the present actual situation of 
the community-wealth of the nation, scattered throughout 
the pockets of eighty millions of purchasers and a prey to 
the attacks of the profit-seekers. There the lid is not only 
off; there never was any lid. There the invitation is not 
a whispered one, sent from behind averted hand to a 
favored few; instead, it is the national motto: " Succeed 
in business, at whatever cost to the consumer ! '' and it is 
thundered at the youth and ambition of the land from the 
time they are able to follow the simplest monetary trans- 
action until they grow too senile to exact a profit. We, as a 
nation, carry on an avowed and systematic defalcation of 
each other's welfare upon a scale never before known to 
man. Mr. Thomas W. Lawson holds up his hands in 
astonishment and horror at the " steal " of thirty-six mil- 
lions of dollars by the "system." "What would not 
thirty-six millions of dollars buy of good for the land! " 
And yet, Mr. Lawson, wherefore the excitement? Thirty- 
six millions is but a bagatelle compared to what that larger 
system, of national dimensions, known as the competitive 
system, annually lifts out of the people's pockets. Thirty- 
six billions per annum would be nearer the figure, though 
even then too modest. That is what it costs us, and much 
more, to support the barter of the ten-cent counters and the 
New York and Boston stock-exchanges. Mr. Lawson 
himself, and all his stables and yachts, with the whole of 



444 "THE COST OF COMPETITION 

his detested " system " piled on top, are but as a drop in 
the bucket compared with the sum total of useless luxury, 
useless waste and useless pain which we, the consumers, 
sport and support in the name of " free " competition. 
Freedom ! Once again, O Liberty, has thy dear name been 
taken in vain! 

There is no space here for the citation of a multitude of 
detailed facts, nor is it to our purpose. Our aim is to 
straighten out the present widespread confusion of cause 
with effect. The facts the reader can look up for himself, 
from the news of the day or from the past history of com- 
mercialism. Read the history of any corruption you choose, 
or of any great money-making corporation. Look up the 
records of Boss Tweed, of the civil-war contracts, of the 
Pacific railroads, of the Hoosac tunnel, of the Standard 
Oil, of New York Rapid transit, of Philadelphia and Bos- 
ton gas-interests, of the purchase of Delaware's senatorial 
seat, of the current post-office scandals, or of a thousand 
other similar instances. They all reveal one thing : a diver- 
sion of a portion of the profits, made or prospective, of some 
business into corruption-funds with which to expand the 
opportunity for profit. If there were no such thing as 
profits recognized by public opinion or law, if all goods 
were purchasable at the cost of production from a public 
agent, there would be no funds from which to purchase 
governments. Recent history uniformly confirms this 
statement. Whenever, in a city burdened by a machine, 
there has arisen a question as to the future ownership, 
public or private, of a public service, the machine has uni- 
formly stood for private ownership. Under private owner- 
ship there were profits which must be shared, there was 
" fat to try out." The machine would have Its share. 
Under public ownership there would be nothing to divide. 
In St. Louis, Mr. Steffins says : " But the grandest idea 



THE COST TO TiHE COMMUNITV 44S 

of all came from Philadelphia. In that city the water- 
works were sold out to a private concern, and the St. 
Louis fellows [the political grafters] have been trying 
ever since to find a purchaser for theirs. They are worth 
at least $40,000,000. But the boodlers thought they 
could let it go at $15,000,000, and get $1,000,000 or so 
themselves for the bargain. ... It will be done 
some day." But not if the heresy that any private party 
may legally own a public service, as a means for collect- 
ing a tax from the people in the shape of profit, has died 
out by that time. 

Embezzlement amounts to nothing compared with this. 
That process is now chiefly rife in private banking-offices, 
by cashiers earning the starvation-wage for their class. 
But even then, at its worst, what does it amount to? " The 
little looters ! '* exclaimed Justice Jerome, at one of the 
meetings of the political campaign against the New York 
machine: "What are they to the octopus that holds 
the whole city in its grasp ? " That octopus is a system 
embodying all the great profit-making corporations of the 
city, chiefly those engaged in services widely recognized 
as public ones. These are the arms which suck the 
strength from the people in the shape of profits and divi- 
dends. Tammany is merely the clearing-house for their 
activities, the central head of the octopus, with its hideous 
single eye to profit. At its soft invulnerability are hurled 
in vain the blows which should be aimed at the enveloping 
arms, the myriad of whose suckers feed upon our daily 
life-blood. 

As to the exploitation of the profits from hired vice, the 
understanding of that refers back to the unemployed. It 
is one step more illegal and immoral than the other, but 
only one. 



446 THE COST OF COMPETITION 

What has already been said regarding prostitution ap- 
plies very largely to gambling. Drunkenness is somewhat 
different in origin. Here, instead of the money being 
made by the sale of one's own soul, it is by the sale of 
another's. So long as a profit of a few cents is obtainable 
from each glass of liquor swallowed, just so long will 
millions of dollars be spent annually, by the brewers, dis- 
tillers and saloon-keepers, in keeping active the consump- 
tion of liquor. It takes thousands of glasses of the slow 
poison to kill a man and remove him from the ranks of 
contributers. His soul is well worth exploitation for 
profit. 

Of all these trickling streams of profit, from the sale 
of liquor, women and " suckers '* gullible into gambling, 
the boss gathers his share exactly as the captain of in- 
dustry gathers his from the profits on oil, coal, gas, 
transportation, telegrams, beef. Ice, etc. The successful 
boss has exactly the same peculiar sort of ability as has 
the successful business man. He can organize his workers 
into a maximum state of efficiency; he can develop his 
field of operations to its maximum extent and fecundity; 
he knows by instinct just how much charge his traffic will 
bear; he performs a public service, in that he employs 
many men who need work in supplying things which people 
will pay for. Indeed, in so far as distinctions may be 
based upon the thing supplied, the boss has the balance 
of right over the business-man: for he supplies unneces- 
saries, while the business-man supplies necessaries. It is 
a common doctrine that it is all right to tax the former, 
but that the latter should go free. Wherefrom, the taxing 
of beef and coal with a profit is infinitely worse for the 
community than the taxation of " wine, women and song." 
The boss has to fight for his life with his competitors; 
he has to contend with dissatisfaction and revolt on the 



THE COST TO THE COMMUNITY 447 

part of his assistants; he must take heavy risks; he must 
work, or be alert to work, night and day. There has 
never been advanced an argument in defense of the enor- 
mous private incomes won in business which does not 
apply equally and exactly to the defense of able corrup- 
tion. All of them, it might be added, also apply equally 
to a defense of piracy or privateering. 

The remedy for all of this lies in the placing of more 
responsibility, not less, upon the organized governmental 
government of the land, and the reduction of pubHc trust 
in its unorganized and irresponsible commercial govern- 
ment. Quibble as we may over terms, both of these are 
governments. Of the two, indeed, the latter is plainly 
much the more powerful. Its duties and responsibilities 
are plainly much the greater. These enormous duties 
and responsibilities we cannot escape. - A community 
of seventy millions of souls finds in its internal relation- 
ships and interactions energy- trans formations occurring 
upon a prodigious scale. The number of dollars which 
are flashed into or out of existence by any act affecting it 
broadly, made in wisdom or in folly, can be numbered only 
by the tens of miUions. Of lives similarly encouraged or 
blasted the enumeration must run into the tens of thou- 
sands. These facts hang over the heads of our public 
men like swords of Damocles. Whether we call them 
public men and award them the dignity, the responsibility 
and the protection which accompanies public office, or 
whether we call them private citizens and leave them in 
the ignominy, the irresponsibility and the uncertainty of 
men who perform public acts and accept public profits 
without public commission, is a secondary question. The 
acts must be performed. Single men must have placed in 
their hands the power and the responsibility of deciding 
and doing, either well, ill or not at all, upon the tremen- 



448 THE COST OF COMPETITION 

dous scale of American national activities. There is no 
question as to the wisdom of the deliberate " centraliza- 
tion " of power. Whether any man or any political party 
wants centralization or not, it is going steadily on and 
will continue to do so. Those who accept the fact and 
bend their methods to suit it will succeed; those who 
vainly kick against the prick of natural evolution will fail 
and die. As population increases, as geography widens, 
as diversity of specialization ramifies throughout both, 
coordination necessarily follows, and grows from an in- 
teresting incident into a fundamental guiding principle. 
Coordination or dissolution, — that is now our sole ques- 
tion: as a nation, to be or not to be. 

Whatever may have been the slings of outrageous for- 
tune, there has never been, in the history of our country, 
any hesitation in the ultimate decision of this question. 
There was none in 1861. There will be none in 1909. 
State-rights must fade and disappear before the needs of 
a nation grown to a degree where its more active citizens 
have lived in a half a dozen States in succession and must 
cover thousands of miles of territory in each week's atten- 
tion to business. Distracting individual selfish interests 
can no longer be considered in a state of affairs where one's 
every act affects millions. Our directors of the production 
of food, coal, steel and transportation are de facto public 
men. By any other name they are the same. There is no 
question of how much power we shall give them. A maxi- 
mum of power they now possess. The sole question Is: 
How best shall it be directed? How can we best choose 
the men, — by public Initiative, the office seeking the man 
and prizing his patriotism, or by private initiative, the 
man seeking the office and coveting Its privileges? What 
shall determine his best fitness for the position, — his 
ability to elevate prices and most heavily tax the people 



THE COST TO THE COMMUNITY 449 

in the form of profits, as In his private commercial selec- 
tion, or his ability to reduce prices and keep down the 
general cost of living, as in his public selection ? How can 
we best bring out his best sense of responsibility to his 
office and his best value to the community, — by offering 
him the maximum reward when he makes prices the 
highest, as when we pay him in the form of profits, or by 
offering him the maximum reward when he makes prices 
the lowest, as when we pay him in the form of a public 
salary? How can we keep the common people best 
mindful of their interest and duty in good government, — 
by making that government not only one of their own 
voices, but one In control of their daily necessaries of life, 
or by presenting to them the present dual and inconsistent 
alternative: of a governmental government, on the one 
hand. In which they have full control but no direct In- 
terest as to Its efficiency, and of a commercial government 
by corporations, on the other hand. In whose efficiency they 
have the most vital interest, but in whose control they have 
no voice whatever? 

These are the national questions of the hour. Upon 
their settlement hangs the fate of the nation, and not 
upon the strength of individual character, as President 
Roosevelt and Mr. Rlis frequently urge. Without 
character there Is nothing, of course. But with an ample 
supply of individual force of character there Is not neces- 
sarily a nation. A bale of first-class manlla fibers does 
not necessarily constitute a strong rope, nor even a rope 
at all. All depends upon the skill with which the indi- 
vidual fibers are laid together, how closely their Interests 
are artificially interwoven. The leaders of the Goths and 
Vandals commanded men of sterling character, of a char- 
acter the force of which still surges through our veins; 
but they had no country and no abiding national life; they 



450 THE COST OF COMPETITION 

possessed no social institutions. There is no sign of a lack 
of individual strength of character among the Chinese; 
yet what are they as a nation? The vast nebula of Orion 
contains infinitely more of ,both mass and energy than 
does our sol'ar system; yet there is no probability that it 
supports a single cell of organic life. Not only is inorganic 
material energy solely a matter of the relationship of mass- 
portions which are themselves absolutely inert, but 
organic, human and political energy are also purely and 
solely a method of relationship, of degree of coordina- 
tion, of unit cells, organs or citizens, each of which, 
isolated, is impotent and passive. 

Mr. Grover Cleveland, at Chicago, in October, 1903, 
in one of the strongest patriotic speeches which has been 
recently put forth, said: " There is abroad in our land a 
self-satisfied and perfunctory notion that we do all that 
is required of us in this direction when we make profession 
of our faith in the creed of good citizenship and abstain 
from the commission of palpably unpatriotic sins. This 
belief is inevitably the parent of a sort of self-righteous 
contentment, which leads us on quite well under the direc- 
tion of those who make political activity their occupation. 

" Give to our people something that will concentrate 
their common affection and solicitous care, — and let that 
be their country's good; give them a purpose that stimu- 
lates them to unite in lofty endeavor — and let that pur- 
pose be a demonstration of the sufficiency and beneficence 
of our popular rule; and we shall find that in their political 
thought there will be no place for the suggestions of sor- 
didness and pelf." 

According to this It would appear that it is scarcely' 
necessary to make the profit-taxing of the community in 
barter illegal and publicly odious, in order to rid the nation 
of " graft," although to do so would be a great step for- 



THE COST TO THE COMMUNITY 451 

ward. Such extreme optimism as this I hardly share. Yet 
certain it is that if we make the people conscious that they 
control their own destinies, both political and economic, 
by having their ballots directly control the directors of 
our great economic services, there will be little trouble in 
getting their response to any reasonably patriotic appeal. 
Russia may say that her moujiks must be something else 
than moujiks before she recognizes them, politically, as 
men. Glasgow's director of municipal enterprises may say 
to Chicago that she must become even as Glasgow before 
she may undertake the control of her own activities. We 
who think are far enough away from both situations to 
see plainly the fallacious placing of the cart before the 
horse: that the Russian peasant is not like the American 
farmer chiefly because he has been given no chance to be ; 
that Chicago is not like Glasgow chiefly in that her public 
services have for generations been placed beyond the con- 
trol of her people and her people therefore become, to 
that extent, a combination of irresponsible tyrants above 
and (politically) inefficient slaves below. The knock of 
opportunity at the door is what awakens man to action 
and efficiency, or else he never awakens. Let him, ex- 
pectant, arise betimes with energy, let him wait through 
the long night with courage and persistence, let him culti- 
vate skill for the fray in his waiting hours of leisure; if 
the opportunity is never accorded him to act, and to act 
effectively, he lives and dies passive and unknown. Inert, 
weak and futile, he is as one of our manila fibers jailed 
within the dark disorder of the bale. 

Education 

'; The history of the American nation has taught, pri- 
^marily, two fundamental lessons: first, the value and re- 
liability of truly popular government; secondly, the im- 



452 THE COST OF COMPETITION 

portance of widespread opportunity for efficient education. 
It has just been shown how effectively the presence of 
barter upon a large and commanding scale negatives the 
former. It is easy to point out in how many ways it 
interferes with our conscientious efforts at securing the 
latter. 

It is to be noted at the start that our standard system 
of complete education embraces two portions, viz.: the 
public school and the privately endowed college, which 
apparently illustrate the two distinctive methods of sup- 
port which have been displayed in these pages in such 
marked contrast. According to off-hand methods of de- 
duction, if public organization is so much more efficient 
than private, then we should be able to see the fact plainly 
in the contrasted effectiveness of the public schools and 
state universities on the one hand and the privately en- 
dowed colleges on the other. It is to bring out clearly 
the superficiality of any such method of argument, as well 
as to show the true connection between barter and educa- 
tion, that this argument is put forth. 

It has been urged in these pages that the only natural 
method of accountance is to charge the consumer for each 
service just what that service costs. In the commercial 
field is found the universal policy of charging the con- 
sumer more than that cost, by the amount of interest, 
profit and the cost of barter. In the educational world is 
found the almost universal rule of charging less than 
cost. 

The public schools, for instance, nominally charge 
nothing; but they do collect the entire current cost of 
education In the form of taxes, first through the medium 
of the city government, which assesses the commercial, 
industrial and financial interests, and then through the 
medium of this commercial organization itself, which 



THE COST TO THE COMMUNITY 453 

transfers that tax, under the name of one of the costs of 
doing business, to the Individual consumers of the com- 
munity. The state universities do much the same. The 
privately endowed colleges collect a tuition fee, but that 
fee Is always less than the cost of the service. A few 
private boarding-schools and academies of the more ex- 
pensive sort habitually charge more than the cost of 
service, and operate In general upon a commercial basis; 
but they are markedly In the minority. 

It seems obvious that all of these plans are open to sub- 
stantial objection. The best plan of all Is that of the public 
school. Here the objectionable features which develop 
In practice are the result, not of the method of handling 
the school's accountance, but of the profit-seeking methods 
which are employed In all other services throughout the 
land. The palpable faults In our public school system 
may be briefly listed: Incompetence of teachers, due to 
political appointment; insufficient equipment; the jug- 
gling of text-books. 

The question of Incompetence of teachers falls right 
into line with any other form of public corruption. The 
pressure from lack of employment and from the starva- 
tion-wage urges young men and women to seek every pos- 
sible aid, by political " pull " or otherwise, to the securing 
of employment. It makes It the chief aim of the ward- 
politician's power to furnish employment for his constitu- 
ents. Since their gratitude and votes are worth dollars to 
" the machine," the school-teaching appointments are nor- 
mally considered among the " plums " the picking of 
which belongs regularly to the politician. Since the remedy 
for this situation will come only with time, as the volume 
of barter within the land slowly diminishes under the 
pressure of Its own instability, there is no more reason to 
urge it as an argument for Immediate action than there 



454 THE COST OF COMPETITION 

Is to urge the servant-girl question or the trades-union 
situation with a like purpose. 

The same may be said as to the insufficient equipment. 
Mr. RIIs has said that he has been unable to Identify any 
man or set of men who actively and maliciously seek to 
deny to the public a sufficiency of parks and school-houses. 
Those whose business it is to see to it are not actively 
opposed to the city's having plenty of both; they are 
merely preoccupied and neglectful. They have other 
"business." Both the city office-holders whose official 
duty It is to see that such things are provided and the pros- 
perous citizen whose unofficial duty It is to look after the 
official and see to it that he Is efficient, are otherwise occu- 
pied. They have both had Ingrained in them, by life-long 
tutelage, the habit of asking themselves before under- 
taking any task: " Why should I do this? What Is there 
in It for me? " If there be no Immediate profit visible, 
it is only good " business " to leave the thing undone. 

The juggling of school-books is a more direct and 
obvious result of .the competitive system. The publishing 
service of the country, not being organized with a sole view 
to furnishing the best possible educational aids at the least 
cost to the community, but to make the most profit that is 
compatible with any tolerable efficiency of education what- 
ever, receives Its greatest pecuniary rewards when the style 
of text-book is altered the most frequently.^^ It therefore 
expends a much higher grade of exertion in seeing that the 
books are frequently changed than it does in seeing that 
their quality is good. And this great expense is " neces- 
sary," because the chief part of the job, the corruption of 

13 I do not mean that the educational publishers do not desire to make 
their work the best possible; but that what they desire and what their 
business permits them to do are two very different things, — as is the case 
with nearly all business-men. 



THE COST TO THE COMMUNITY 455 

city school-boards, Is a most difficult and delicate task and 
calls for great skill. 

Yet, In spite of all these flaws, the public school Is still 
the center and the citadel of our sense of civic unity; and 
of it the public library may be deemed a part. There is 
no service demanded of man by man In which Is required 
such height of ideal as in the education of the young. 
There Is none so pregnant with good or evil for the future 
of the Individual and the state. Therefore was this serv- 
ice one of the first to be removed from the evils of private 
profit-seeking In its conduct. The teachers may be poor, 
the methods may be worse; but the close contact of the 
child with a miscellaneous populace of its own age, per- 
meated with a purer spirit of democracy than any adult 
may ever know and with the strength had only from num- 
bers and diversity, is fostering of truer strength and 
balance against future trials than can be had in any other 
way. Says Mr. Jacob Riis,^* In connection with President 
Roosevelt's use of the public schools for his own children : 
" So only can we get a grip on the real life we all have to 
live in a democracy of which, when all is said and done, the 
public school is the main prop. So, and in no other way, 
can we hold the school to account, and so do we fight from 
the very start the class-spirit which Is the arch-enemy of 
the Republic." There Is no greater sign of weakness In 
the class of people which is regarded as the winning one 
in the present race for wealth than its combined fear and 
scorn of the public school as the best field for the natural 
development of its children. 

The people as a whole have no suggestion to make for 
a return of the schools to private control. All Innova- 
tions, indeed, as of free text-books, show a tendency in the 
opposite direction. So, while we must regard our schools 

14 The Outlook, 1904, page 556. 



456 THE COST OF COMPETITION 

as far below what they might be, because of the prevalence 
of barter In all other services, — chiefly because it reduces 
the average teacher's salary to about one-tenth of the aver- 
age bargainer's income, — ^yet it must be remembered that 
they are infinitely better than If they were conducted on 
the commercial plan, with private profit as the primary 
and education as the secondary considerations In view. 

In the same line as the municipalization of the schools 
In the past and of the school-books in the present, there 
is abroad, with promise for the future, a growing recogni- 
tion of the futility of public education of the child in one 
direction while at school in the face of a directly opposite 
education carried on at home. The children spend a thou- 
sand hours yearly at school and four times that time in 
waking hours amidst the influence of the home and its sur- 
roundings. It is the environment of the latter period, an 
environment in the great majority of cases almost entirely 
beyond the control of the parents, which constitutes the 
true education allotted to the child by the republic. Edu- 
cators universally deplore this fact. They as universally 
speak of it as irremediable. By the educators It is, but 
not by intelligent public action. This action must be 
taken, to the reform of the home-influence and environ- 
ment, before the most perfect methods of education at 
school can have appreciable effect. 

So it Is not the public school system, much maligned as 
It may be, which constitutes our most fiery text. Nor is it 
the private academy or " cramming-school " system, com- 
mercialized as It Is, either; for these latter, having to com- 
pete with publicly operated schools, must always evince 
the greater cost of profit-seeking methods and so make this 
class of education too expensive to appeal to more than a 
minority. It is our college-system, instead, the faults of 
which are becoming more palpable as the college grade of 



THE COST TO THE COMMUNITY 457 

education becomes more and more a matter of course for 
the average young man or woman. 

Nor, In this direction, Is It planned to preach of the 
more obvious evils. Of the subservience of educational 
methods and doctrines to the Influence of the private 
wealth upon which the college relies for support, for In- 
stance, and especially of the evil of " tainted " money, 
plenty Is being said In other places. That It constitutes a 
fundamental weakness In our path of Intellectual progress 
no thoughtful man can deny. A few professors have 
resigned their positions rather than bend their teachings to 
the money-pressure. But they stand as but a token of the 
vast number of those who prefer the other horn of the 
dilemma : to alter their teachings from what they believe 
to be the highest truth rather than to risk Incurring the 
antagonism of the moneyed source of power or of the gen- 
eral class of wealthy and Influential citizens. My own 
personal acquaintance with college-professors Is wide 
enough to warrant the assertion that this evil, consciously 
manifested. Is very widespread. Unconsciously mani- 
fested, It Is almost universal. 

Nor Is It planned to dwell here upon the small pay which 
the competitive-wage system awards to the teachers of the 
land. This feature is one of the most Insidious of all 
the evil fruits of barter. It Is universally admitted that the 
training of the young Is the one service most fraught with 
the seeds of national success or failure In succeeding gen- 
erations. That we should pay the workers In this service, 
on a rough average, some one or two hundredths as much 
as we do those who care for our current stock of Inert cir- 
culating medium. Is one of the most significant Indictments 
which It Is possible to bring against our present plan of 
wealth-distribution. That we should fail to provide even 
so unjust a plan as this for securing to them the means for 



458 THE COST OF COMPETITION 

leisurely research, leaving that whole matter to the hap- 
hazard of private personal donation Instead, making of 
every m.an who longs to do such work a groveling beggar 
at the very start, is a more striking fault of national 
organization ; but it Is not one more fruitful of evil. Cer- 
tainly there could be little excuse for surprise If the col- 
lege-professors of the land should do what Is for them the 
only sensible thing: to form a union and then strike to 
compel all colleges to charge the full cost of Instruction — 
some three or four hundred per annum. In comparison 
with the one or two hundred now asked — and to corre- 
spondingly Increase their salaries. When the services 
supplying the public with all other commodities are habitu- 
ally charging the consumer from two to five times the real 
cost of supply, and that without effective rebuke, there 
seems to be little reason why the college-teachers should 
continue longer to present the community with educations 
at two-thirds of cost. 

Instead of any of these evils, all of which others seem 
now and then to see and preach plainly. It Is most fit that 
In this, the chapter upon the ethical cost of barter to the 
community as a whole, should be advertised the one evil 
result of barter upon education which no one else seems 
to see, albeit it is as widespread as is population and Is 
active in every school, no matter what Its personnel or its 
methods of organization. I refer to the fundamental 
standards, aims and ambitions of the student and of the 
teacher. 

It may be that, situated as I am in a technical school, I 
see this fault in an exaggerated light. Certainly it does 
not prevail so markedly In non-technical schools. In the old- 
fashioned academic departments. But because this is so 
these academic departments are being deserted. The 
students are flocking Into the technical schools and courses. 



THE COST TO THE COMMUNITY 459 

The statistics are astonishing. Even the pubhshers are 
following suit. Within the past two years a half-dozen 
publishing houses which never before handled text-books 
of any other than the classical type have opened their doors 
to the technical, and particularly to the engineering, fields. 
It might be Inferred from these words that there is to 
follow in these pages an orthodox crusade In favor of 
abandoning the more modern " materialistic " lines of 
study In favor of the older classical or " humanitarian " 
ways. Therefore this opportunity Is sought at the outset 
for a formal disavowal of any such a purpose. Nor can 
this disavowal be made too strong. Not only Is the rela- 
tive diminution of classical studies and the Increase of the 
natural sciences the result of a natural evolution In educa- 
tional methods, but it Is one upon which we are only barely 
embarked as yet. Indeed, it Is the ambition of the writer 
to sometime preach, at much greater length than Is possible 
here, the doctrine that a long-continued familiarization 
with the natural sciences in laboratory and class-room, 
sufficient to drill not only the Intellect but even the Instinct 
into a grasp of their common fundamental principles. Is 
the only proper foundation for an effective understanding 
of life-work in any of its branches. He hopes to see it 
widely recognized that all departments of human activity 
are but forms of energy-transformation, and that a long 
drill in physics, chemistry, astronomy, mechanics and ener- 
getics is just as essential a preparation for endeavor in the 
field of law, journalism, state-craft or the ministry of the 
gospel as it is now regarded for the practice of medicine, 
psychology, navigation or the several engineering profes- 
sions. The day of the direct study of man is gone. His- 
tory and the dead languages we ought all to hope to enjoy, 
as a luxury of self-culture. But as a means for under- 
standing, rather than memorizing, and especially for pre- 



46o THE COST OF COMPETITION 

dieting, human action they are of almost no use. Man is 
now firmly installed, in modern scientific thought, as an 
ultimate result of natural evolution, as a highly intricate 
locus of inanimate energy-transformations. Therefore, 
the proper study of mankind is nature, inert and organic, 
not man. When the true reasons underlying the form 
and activities of the stars, the molecules and the mollusks 
are once known, the problem of human life, individual and 
social, will have been nine-tenths solved. ^^ 

Therefore the obstacle here descried in the pa.th does 
not consist of the palpable growth of preference for mate- 
rialistic over classical studies, as such. It consists, rather, 
of the almost universal insistence, to-day, that an educa- 
tional course shall do one or the other of two things: 
either it shall amuse or it shall pay. 

The demand that it shall amuse rather than discipline 
the pupil comes from a minority only, and that minority 
consisting of the ones who can afford to spend four years 
at college for nothing better than the incidental polish of 
contact with a thousand of one's fellows. These pupils 

15 The writer would here reserve the right to future sermons upholding 
the return of the classical studies to our curricula. It is not that he esteems 
them the less that he acquiesces in their banishment, but that he prizes 
natural truth the more. It is not that he dislikes them the more that he 
urges a change, but that he contemns some present methods most of all. 
The ideal educational course of the future will comprise, first and as a 
major, the study of nature, as a source of mental power. In second and 
incidental place it will include a study of man and his works, as a source 
of grace, beauty and enjoyment. Handicraft it will also teach, as an art 
and as a duty. But the present technical training of the hand and the 
mechanical part of the brain into a maximum fluency of duplication of 
purely wage-earning tasks it will reject altogether, as no proper part of 
youthful education. As the training of the adult specialist this policy 
may continue to play an important part; but it cannot constitute, nor aid, 
nor aught but negative, an education. The lean failures of men of the 
next generation, feeble-minded and unresponsive, instances of arrested 
development grown out of our present output of automatons, shall bear 
sinister witness to this fact. 



THE COST TO THE COMMUNITY 461 

are almost universally rich men's sons, together with a 
scattering of sycophants. They are numerous enough and 
momentarily Influential enough to explain the rapid 
growth of the elective system and the " snap " courses 
which render it so attractive. But otherwise this class of 
young citizens may almost be Ignored. They lack dis- 
cipline, either mental or bodily. They lack earnestness. 
They are not Immoral, but they are weak. They lack, in 
some manner or other, true vitality. They live fairly long 
lives, they are accredited to good positions In society, but 
they do not do the world's work of permanent value. 
They do not even reproduce. Their blood flows not In 
the veins of the next generation. A turn of the dial and 
they are gone. The race Is busily engaged in sloughing 
them off by natural process, and they need concern us no 
more. 

The demand that education shall pay, and pay In cash 
immediately upon graduation, however, may not be so 
summarily disposed of. It does not come from the mori- 
bund, but from the lusty and e'arnest. It is artificially 
forced upon them by the pressure of competition, rather 
than natural to them. It is true; but It Is there, nevertheless, 
born and bred Into their bones and become a part of their 
nature. Nor does It seem to surprise anyone. Indeed, it 
Is honored. Professors and instructors expect and laud 
It, even rebuke Its absence. Presidents and heads of de- 
partments mold their courses of study and the equipment 
of their laboratories to meet it, and the trustees back them 
up. Alumni urge It upon their institutions with earnest- 
ness, and with the greatest narrowness of mind of all. In 
consequence, the general plan and the details of each 
course, especially the technical ones, are coming to be built 
up upon the fundamental idea that the institution. In order 
to succeed, must turn out graduates who are able to work 



462 THE COST OF COMPETITION 

at the maximum efficiency of money-getting Immediately 
after graduation. 

It is time that that portion of the community which 
takes interest In both our ethical standards and our intel- 
lectual progress should stop and ask itself: "Is this 
right?" 

To raise this question is not to retire to the exalted but 
feeble platform of the visionary aesthete and to say: " All 
which feeds and clothes Is sordid. Only the Nirvana of 
the true love of abstract beauty is our proper aim." The 
weakness of all such thought as this, wherever it may be 
used as an excuse from hard, dirty work. It is the aim of 
this book to proclaim. The world's work is essentially 
noble and ennobling. He who raised higher standards 
of altruism than the world has ever been able to follow 
said: " Hew the wood and you will find me; cleave the 
stone and there am I." No, It is not our purpose to 
breathe one syllable against the training of both lads and 
lassies to the habit of daily, wholesome, useful work in 
contact with the soil, but rather to urge It strongly. But 
this Idea of training them to earn immediate cash is a very 
different proposition. 

The question Is: What is the world's work? What 
sort of work Is most useful to the world about us, — not 
to the world of employers, but to the world of men and 
women? What, too, is most ennobling to ourselves? 

If we stop to look about us at the achievements of the 
present day. If we analyze modern applied knowledge and 
trace the origin of our most useful information to Its 
source, we must be struck with one universal fact about It. 
When that information was acquired it was of no use to 
anyone. The men who dug it from the darkness of chaos 
never earned a cent with it. 

What are the foundations of our science of mechanics, 



THE COST TO THE COMMUNITY 463 

most relied upon of all other sciences? The laws of New- 
ton and Kepler. Who laid the corner-stones of modern 
physics? Archimedes, Torricelli, Boyle and a long list 
of similar men. What paved the way for modern chemis- 
try and made possible the enormous wealth-production 
which it supports and guides? The discovery of oxygen, 
by an unknown Swedish village-apothecary, and its se- 
quence of other elements. Where would the present invalu- 
able industries in applied electricity and electro-chemistry 
disappear to should we suddenly lose all record of the 
work of Franklin, Faraday and Volta? 

These are trite questions, but they were never more 
needed than now. Every one of these men worked, each 
one of these discoveries was made, in utter disregard of 
any monetary return for the effort put forth. Indeed, so 
far as all considerations of money and comfort are con- 
cerned, there was every possible inducement against the 
work. Poverty, discouragement, the obscurity of neglect 
or the notoriety of persecution, — these alone were the 
rewards to the doers. The glittering splendor of our own 
extended industry was the reward of the race, but it was 
invisible then, even to the far-seeing eyes of these few. 
To these the love of knowledge and the love of doing were 
their sole excitants and their whole reward. 

It would, of course, be puerile to urge our return to the 
tasks of our fathers. Theirs was the opportunity upon 
the unbroken field. Basic principles always come first; 
and while there are plenty of these yet undiscovered, yet 
it was but natural, to a degree, that they should lay founda- 
tions and we gild cornices. But are we not a little hasty 
with our cornices, — being perhaps content to cap solid 
granite foundations with sheet-metal pretense, in order 
that our superficial gilt may find expanse to rest upon be- 
fore the solid masonry has been slowly reared to a finish? 



464 THE COST OF COMPETITION 

Have we not yet need for Intellectual hewers of hard stone, 
— or is the virile growth of thought now completed for all 
time? 

However this may be, the spirit in which these old 
pioneers worked will never be out of date. The law of 
interaction between abstract discovery and concrete em- 
ployment will never lapse. The toil of one man in the 
name of pure science to-day is still the price of food for 
the millions to-morrow. By that method shall we make 
intellectual progress, or we shall not make it at all. 

It may be replied to this that such ideals in education 
are all well enough for the minority, but that the world 
demands that the great majority should stick to the ham- 
mer and the distaff. Right there is the great misunder- 
standing. So far as can now be seen, the law lies certain, 
not only upon the majority but upon every man, that he 
shall himself stick to the hammer in his own support dur- 
ing at least a portion of each day. Our so-called " upper 
classes " of college-bred, office-fed men are even now dying 
out, by involuntary race-suicide, because they defy this 
law. It is the worst loss of the winners at commercial 
competition that they are denied this wholesome duty and 
privilege. But whether one be at the forge or in the 
furrow, in the library, the laboratory or the forum, the 
spirit of the properly taught should ever be the same: to 
work solely for the love of the work and to take no heed 
for the future return from it. If one can do this, if he 
never feels tempted otherwise, then he is educated. He 
sees what is invisible to the uneducated. He sees the 
divinity of work. He sees the beauty of all things, all 
times, all places. He sees the unity of all nature and the 
unity of the human race. He sees history without dates. 
He sees his work crowned, utilized and enjoyed, by future 
generations of men if not by his compatriots. He cannot 



THE COST TO THE COMMUNITY 465 

mistake. He acts according to natural law. He has but 
to sow and to water ; God will grant the increase. 

But so soon as enters the question of an immediate cash 
payment for each hour's work done, all this majestic pros- 
pect must disappear. The thing chosen to be done is no 
longer selected by natural law and natural impulse. It 
becomes subservient to the dictates of the purse-bearer. 
The free attraction of the mind toward the truth is ham- 
pered. The line of progress is diverted. We abandon 
the foot-paths trodden by Aristotle and Galileo to become 
fan-wavers behind some petty throne. When we finally 
drop out of sight we leave behind us no one thing done 
which is of use to man and of honor to us. 

This is the lesson so needed to be learned by the world 
of to-day: that the great bulk of current pottering and 
hammering and quill-driving now going on among the 
millions, in shop and drafting-room and office, is but dead 
pottering, doing nothing which the world will permanently 
prize, piling up obstacles rather, which the next genera- 
tion must wearily take down again, as they must the sky- 
scrapers, — leaving no more mark, with all their zeal, upon 
the history of human Institutions than did the builders of 
the pyramids or the upholders of the Spanish Inquisition, 
nothing but a token of the futile weariness and pain of the 
unknown myriads, of the futile pride and cruelty of an 
infamous few, but of constructive aids to human life and 
hope almost nothlng.^^ 

16 The full force of this position cannot be grasped until the reader shall 
have finished this work and joined the author in his view, from a distance, 
of the natural civilization toward which we are struggling and drifting, 
and of its contrast with our present semi-barbarism of industrial profit- 
seeking. Would you gain this perspective, let us see how Taine views 
similarly, from a distance, a similar epoch in the twelfth century. He is 
writing chiefly of literature and makes that his bull's-eye. I write not only 
of literature, but of all other modes of ethical expression: art, architecture, 



466 THE COST OF COMPETITION 

To bring this sermon home in detail, one needs but ask 
what fault does this mistaken policy show in our graduates 
of to-day. Wherein is present education failing? Plainly 
in this, that it is short-sighted. 

In the first place. It is inconsistent in its advice. It 
lauds the cultivation of earning-ability and at the same 
time advises education. Yet education is not what earns 
money. Look over the list of millionaires and multi- 
millionaires (excepting those so young as to have inherited 
what they have) ! How many of them possess or rely 
upon college-educations? How many do not pride them- 

music, invention, constitutional law, anything which can embody, preserve 
and transmit high ideals for the support of future races of men. He wrote 
of a time when things moved slowly, when three centuries were as three 
decades now. He wrote solely of the scholastic department of life, then the 
only field of progress. I write of the world's workers, of the builders of 
our nation's outward expression, whether professional artists or wage- 
earning designers or office-seated leaders of men. I write of the ideals 
which imbue them and which they owe to their education, wherever they 
got it. I write of the dogma which shackles them, midst an age of fierce 
activity, almost into paralysis, — just as did Taine. The dogma which he 
condemns was the Scholastic Philosophy. That which I attack is the Philos- 
ophy of Commercial Competition. 

" Beneath every literature there is a philosophy. Beneath every work 
of art is an idea of nature and of life. This idea leads the poet. Whether 
the author knows it or not, he writes in order to exhibit it; and the charac- 
ters which he fashions, like the events which he arranges, only serve to 
bring to light the dim creative conception which raises and combines 
them. Underlying Homer appears the noble life of heroic paganism and 
of happy Greece. Underlying Dante, the sad and violent life of fanatical 
Catholicism and of the much-hating Italians. From either we might 
draw a theory of man and of the beautiful. It is so with others; and this 
is how, according to the variations, the birth, blossom, death or sluggish- 
ness of the master-idea, literature varies, is born, flourishes, degenerates, 
comes to an end. Whoever plants the one plants the other ; whoever under- 
mines the one undermines the other. Place on all the minds of any age a 
new grand idea of nature and life, so that they feel and produce it with 
their whole heart and strength, and you will see them, seized with the 
craving to express it, invent forms of art and groups of figures. Take 
away from these minds every grand new idea of nature and life, and you 



THE COST TO THE COMMUNITY 467 

selves, as self-made men, upon never having had more 
than a common-school education? Why, I have seen 
whole sets of statistical curves projected to demonstrate 
the superior earning-capacity of technical graduates who 
had had a post-graduate course over those who had not, — 
and the most lucrative position listed there amounted to 
some six or seven thousand a year ! The average income 
was but two or three thousand. But how about the in- 
comes of sixty or seventy, or of six Or seven hundred 
thousand? How about the much more common rates of 
sixteen to thirty thousand? How many post-graduate 
degrees does it take to earn those incomes? 

No, these incomes, which alone constitute success of the 

will see them, deprived of the craving to express all-important thoughts, 
copy, sink into silence, or rave. 

" What has become of these all-important thoughts? What labor worked 
them out? What studies nourished them? The laborers did not lack zeal. 
In the twelfth century the energy of their minds was admirable. At Oxford 
there were thirty thousand scholars. No building in Paris could contain 
the crowd of Abelard's disciples; when he retired in solitude, they accom- 
panied him in such a multitude that the desert became a town. No suffer- 
ing repulsed them. . . . These young and valiant minds thought they 
had found the temple of truth; they rushed at it headlong, in legions, 
breaking in the doors, clambering over the walls, leaping into the interior, 
and so found themselves at the bottom of a moat. Three centuries of labor 
at the bottom of this black moat added no single idea to the human mind." 

The italics are mine. Is there no parallel, even to a degree, in our own 
day, when Harvard and the University of Michigan have grown in fifty 
years from hundreds to tens of thousands; when the publishers of books 
report their lists of new ones not only by the scores per month, but per 
week, apologizing to the public when a single day passes without the 
appearance of at least one new volume; when these last fifty years of 
forge-fires and hammer-blows, of new fiction and peace-conferences, finds 
just as many people oppressed with hunger as at the start, finds in the face 
of an unappeasable appetite for reading-matter almost no current accumu- 
lation of permanent literature; finds art schools and galleries and societies 
galore, with no art in them but that of the copyist; finds a science of 
sociology as dumb in response to the universal questioning, as to why it 
all is so, as in the days of Adam Smith? 



468 THE COST OF COMPETITION 

worshiped sort to-day, are earned by schooling of another 
sort. Imagine this wage-earning advice to the young to 
be consistent, and what must be its tenor? First and 
foremost, not to go to college at all, but to flee from the 
effete shades of knowledge unapplied to profit-making. 
Go, instead, into business ! Do business, from the age of 
fifteen on ! Breathe and eat and drink business; worship it 
by day and dream of it by night ! Reduce every feature 
and opportunity of life to its simplest terms, a percentage ! 
Learn at every turn to take all that the law allows, — and 
five or five hundred per cent, more if you can escape detec- 
tion ! Learn to tax and browbeat your competitor and the 
general public to the last degree, gauging most accurately 
how far the pressure may go before the worm will turn ! 
Ah, could not a school be organized which would really 
supply what these innocent misguiders of youth advise 
them to seek? The main fagade would be crowned with 
a gilded calf, supported on the one hand by a memorial 
statue of Tweed and on the other by one of Quay! An 
imposing string of Astors and Vanderbllts for trustees! 
Mr. J. P. Morgan for treasurer! Mr. J. Edward 
Addicks for president! Mr. John D. Rockefeller for 
chaplain! Mr. Thomas W. Lawson for lecturer upon 
ethics, and Messrs. Hyde, Harriman, Hill, etc., for the 
rest of the faculty! Mrs. Chadwick for librarian (when 
she gets out) and Chief Devery as athletic director! 
The amphitheater-lectures would illustrate, by experiment, 
the art of making your man give an order or take a price. 
Psychometric dissection of the living consumer would 
develop the exact degree of abuse bearable before revolt. 
Would it not be magnificent? If the chief end of man is 
to make money, then the chief aim of education must be 
to teach him how to do it; and where can be gotten such 
inspiration to zeal and Industry in this laudable direction 



THE COST TO THE COMMUNITY 469 

as from the contemplation of those who have succeeded 
in surpassing a milhon rivals in its pursuit? 

Go to! Let us at least be consistent! Let us either 
close our college-doors and tell the youth of the land to 
go elsewhere, that we college-professors do not know what 
they wish to learn, or else let us say to them plainly, be- 
fore they enter, in every lecture, in our every deed in 
laboratory or library, that the one lesson which we have to 
teach, the one lesson which they most need to learn, — 
which they will have difficulty enough in remembering. 
Indeed, against all the temptation of the outside world, 
throughout the many years succeeding our brief effort at 
its Inculcation, — is that he who works for the sake of 
the wage works to naught, and that only he who fol- 
lows where love of work leads him, utterly disregardful 
of cost or consequences, truly serves himself and all 
mankind ! 

Furthermore, this Indictment of short-sightedness in the 
present college-course can be argued more in detail than 
the above. It aims at turning out a graduate who can do, 
during the five or ten years immediately following his col- 
lege-course, with the maximum speed, the things which the 
world of employers was wanting done at the time when, 
or just before, his education took place. He must be able 
to compute and draft and analyze and amputate with the 
maximum of celerity and skill. In other words, he must 
be the most profitable of employees,— for he is an em- 
ployee just the same, even If he be a surgeon. If he operates 
chiefly for his fee. He Is not asked to plan or discover or 
conceive beauty In design; that earns little or no money. 

But the slip in the argument Is that after that first 
decade out of college, by the time he finds opportunity 
for really good work, he has dropped all the details of his 



470 THE COST OF COMPETITION 

college-education below the horizon. He retains only its 
fundamental principles. ^^ 

It must have been observed by all educators that the 
development of the mind proceeds at a fairly equal pace 
in all classes of individuals. Our system of graded schools 
could not exist were this not so. The difference between 
individual intellects lies chiefly in the age and distance 
which they can traverse before they cease all progress and 
drop out of line. Some do well up to the fourth grade 
of common school and then fail. They do not spend the 
same time in traversing this ground which the brilliant 
pupil does in completing his education, which finishes, say, 
with a Ph.D. Up to the fourth grade the two proceed 
fairly side by side; but there one stops and the other goes 
on. Some reach the high school, but never enter. Some 
complete the high school course before they " find their 
number " for life and settle down upon it. All through 
the college-course this sifting goes on, weeding out those 
who can go so far but no farther. Only a respectable 
minority find profit in a post-graduate course. 

What then? Time nor life stops when the last degree 
Is earned. Is not the picture of life to be drawn upon the 
same lines ? Are there not some who give brilliant prom- 
ise at twenty or twenty-five who at thirty have attained 

17 Repeatedly I have had alumni tell me: "Your course is strangely 
lacking. Now I, as an employer, am seeking all the time men who can do 
so and so. Why do you not put this training into your course ? " If we 
did we should be turning out wooden failures of men. There are thou- 
sands of these employer-alumni, each with his particular pet task in mind, 
desirous of employing automatons out of whom to make a profit. If we 
trained our graduates into grist fit for these hoppers they would be fit for 
a score of such mechanical tasks none of ijohich ivere any more in demand 
by the time they reached responsible years, and for nothing else; while 
for bold and effective progress of their own into fields now unknown, but 
soon to be in demand, they would have been utterly incapacitated, so far as 
we had been able to influence them. 



THE COST TO THE COMMUNITY 471 

their zenith? Some go on a few years further and still 
make progress. But only very, very few there are, those 
who leave their mark upon human history, who continue 
beyond this point and in the fifth, sixth and seventh decades 
of life still evince the ability to learn and to teach,— who, 
like the grand old Gladstone, can lie down, in their ninth 
decade, upon their last bed of pain with the prayer of 
gratitude for the privilege: " One more lesson, Oh Lord; 
one more lesson to be learned ! " 

Is it not, then, the prime and the sole object of all edu- 
cation to lengthen this time of intellectual progress for 
each man, to increase the average longevity of the intellect 
of the race, just as it is the aim of all applied biology to 
lengthen the body's span of years? But this cannot be 
done by multiplying exercises. This can only be done by 
leading each youth to love knowledge, to see that all fornis 
of truth are one, to learn equally from the pages of his 
mathematics and from the eye-piece of his microscope 
that all branches of science are but the study of different 
phases of a single Nature and that all phenomena are but 
the manifestations, upon different scales and speeds of 
integration, of the same elemental activities; to learn that 
time and space and dimension are not, and yet that there 
exist eternal, indestructible realities; and finally to have 
complete faith in the unity of God, nature and man — 
to the end that his mind may be ever free from bigotry 
and prejudice and open to each new and strange form of 
the old Truth. This, and this alone, would seem to be 
education. " Whether 1 teach Greek roots or Roman law 
or the precession of the equinoxes," said one of my revered 
teachers, now laid away to rest, '' I teach the truth of life. 
I remember always that in each division before me prob- 
ably sits some future great man, and I teach for him. The 
rest even if I shoot over their heads, are sure to gain a 



472 THE COST OF COMPETITION 

little true gold and to have missed some burden of dross 
which they otherwise would have picked up." Before a 
gathering of New England college-educators an official 
of the Pennsylvania Railroad Is reported to have said: 
" For apprentices in our Altoona locomotive shops we pre- 
fer the graduates of the academic to those of the technical 
schools. They have learned the Law of the Conserva- 
tion of Energy and the humility of the true student, which 
is all that any course can teach, and they have nothing to 
unlearn." 

. When we teach for the sake of the year after gradua- 
tion we teach things of ephemeral value. Let us who 
have attained to years of responsibility look back a quar- 
ter-century and ask ourselves : " Supposing we had re- 
membrance of every atom of our college-course, how much 
should we find useful to-day? How much of it would we 
not find a heavy burden of obsolete method and absolute 
falsity of doctrine?" These things we educators must 
remember in laying out our present work, that of nine- 
tenths of what we so carefully teach to-day all that is not 
forgDtten twenty years hence will be in ridicule. The 
other tenth will consist neither of details nor of applica- 
tions nor of methods. It will consist of principles so 
fundamental as to form a part of all thought and to apply 
to all problems of application, and so well established as 
not to be shaken by future discovery. These things alone 
we know and should teach. It requires a very short class- 
room course to impart them. It requires more than the 
allotted three-score-and-ten of years to grasp and utilize 
them to their utmost. 

These are the reasons why the detriment of our educa- 
tional standards and methods Is one of the heaviest costs 
to the community which can be charged against the com- 
petitive system. For the competitive system is wholly 



THE COST TO THE COMMUNITY 473 

to blame for It. There Is no natural physiological 
tendency in man to otherwise explain Its presence. It 
is the natural result of the artificial pressure upon 
employers and employees alike, to make of every man 
a machine. Each hour's effort must produce enough of 
value so that seventy per cent, can be deducted for cost 
of barter and enough be left to feed the next hour's effort. 
And so the college-student of the technical sort (which 
promises soon to be all-inclusive) is carefully trained to 
earn. He is not educated; he is trained. Each thing 
which he may be called upon to do after graduation, each 
problem which can be foreseen, he must practice doing 
and solving in undergraduate days. He learns by rote, 
as do the Chinese. The discipline of unaided struggle 
with abstract problems, earning the ability to think alone, 
and the inspiration of the study of fundamental principles, 
earning the ability to see clearly a path ahead when to 
others the obstacles are rigid and opaque, — these are quite 
lacking. As the years of after-life pass by, so far as the 
college-education may still make or mar, the dull product 
of this mechanical training must still sit and twirl his 
thumbs, in the obsolete manner taught him years before, 
while the new demands of the new times are dragging 
into prominence and power the men who are not so 
wooden, the men who were truly taught, in college or out, 
and who awaited their education in wage-earning applica- 
tions until they entered the wage-earning world. 

Let here be raised in solemn warning, then, the declara- 
tion that, of all the painful tasks of reconstruction which 
await the Impending overthrow of our now almost obsolete 
commercial system and the clearing of the ground for 
better things, — worse than the reabsorption of the mil- 
lionaires, the razing of the slums and skyscrapers and their 
replacement with the less grotesque and gruesome, — the 



474 THE COST OF COMPETITION 

worst Is to be the slow outgrowth, requiring more than 
one generation, of the educational faults now being 
branded upon the youth of the present and near succeed- 
ing days. 

For it is useless to place before us Huxley's, or anyone 
else's, statement of what constitutes an ideally, perfectly 
educated man, of what the divine image looks like, unless 
we are at the same time told why we do not now attain it. 
For if we fail of it, it is we who are at fault. The divine 
power of natural growth, animated and directed by the 
Supreme Intelligence, will take care that the resultant 
image is of the proper stamp, if we but permit opportunity. 
If it come out marred or distorted or stunted, let us look 
for mistaken strokes on our part, not on God's or nature's, 
not for original sin or total depravity. To abstain from 
marring the pure raw material intrusted to us, the child- 
hood of which is the kingdom of Heaven, by pressure, by 
haste, by avarice of the visible, by odious comparison : 
this is the proper aim of all education. This we shall have, 
in kindergarten and university, when, and not before, a 
price is no longer placed upon all human life and made 
variable by barter. 

The Public Libraries. Closely alllecj with the pub- 
lic schools, in our system of education, are the public 
libraries. They exhibit more clearly than does any other 
instance in our present organization the natural fountain 
of pure social ethics and aesthetics, the true and natural 
relations between man, his work and the state which spring 
up promptly when barter is eliminated. 

Most of us now living have seen the gradual extermina- 
tion of the private library as the repository of the com- 
munity's printed thought. A few friends In boards and 
cloth each of us still keeps by him, it Is true; but the 



THE COST TO THE COMMUNITY 475 

reliance of the community to-day for its reference funds of 
knowledge is the large public library. 

To these libraries men contribute, as individuals, what 
they are able. Some books, — most of them, as numbers 
go, — are written for the sake of cash. How worthless 
are they to the community ! They are its literary burden. 
As for those of Miss Alcott, written to shingle the barn, 
and Sir Walter's later volumes, indeed, they are not to be 
burned with the rest ; genius is behind them, — prostituted, 
because of competition, to shingling barns. But they are 
the exceptional few. Burning is too good for most of the 
others. Of all of those which stand as permanent con- 
tributions to human possessions of real knowledge, every 
one was gotten out without regard to pecuniary considera- 
tions, and usually in defiance of them. Did some of them 
bring in money? If they had not they would still have 
existed. Most of them brought in poverty and scorn; 
some of them the stake. 

How they have increased in numbers, too ! The books 
formally enrolled In public libraries have multiplied by 
^ve hundred per cent. In less than thirty years. Is this a 
sign that public organization kills Initiative? Has any 
other institution of equal Importance, but privately organ- 
ized for profit-making, any better record for prog- 
ress? The writing of the books was largely for profit's 
sake, and so, as literature, they are many of them worth- 
less. But the zealous gathering of them upon the llbraryr 
shelves, where all might have access to them with the 
greatest ease, the Industrious expansion of facilities for 
the public use of them, the uniform courtesy of the attend- 
ance, — all of these are the direct result of the public organ- 
ization of the libraries and their operation without the 
most remote Idea of personal profit or corporate dividends. 

From these libraries men draw what they can. The 



476 THE COST OF COMPETITION 

only restriction upon the utilization of their treasures is 
the ability of the individual to absorb. They are quite 
free from charges, onerous or otherwise. Do we find rife, 
therefore, a natural disposition to steal the books? Prac- 
tically none. There is no incentive; naught Is to be 
gained in that way when everything Is so free. , Men steal 
only what they are forbidden to enjoy. 

The existence of the public accumulation of all knowl- 
edge is Infinitely more comfortable and useful to the Indi- 
vidual than Is any fractional hoard which he can possibly 
amass, care for and defend. We shall some day see that 
this is also true of a public accumulation of any enjoyable 
thing: not of money, for money is not an enjoyable thing, 
only a tool for measuring transactions, already largely 
replaced by mere written records; but of houses and land, 
food and clothing, transportation and fine art. In repre- 
senting which money first assumes any value whatever. In 
the past development of society, as the neglected pathway 
of barbarous times became the modern boulevard, requir- 
ing underground construction, paving, sweeping and light- 
ing, has the tendency developed on the part of Individuals 
to walk upon It more than is wise in order to draw to 
themselves Its value away from others? To the extent 
that they utilize It do they not contribute value to the com- 
munity not abstract It: just as men do in utilizing a library? 
Only franchise to tax the public tempts man to monopo- 
lize the public streets. 

Incidentally they wear out the books or the boulevard In 
the using, of course. Is not the cost of maintenance In- 
significant, In comparison with the gain due to the free- 
dom of use? Is It not infinitely cheaper to charge It up 
to a single account, distributing the cost uniformly to all, 
without regard to what they give or what they get, from 
either library or boulevard, than It Is to try to measure 



THE COST TO THE COMMUNITY 477 

out, charge up, bill out and collect each man's debit and 
credit? Have not the privately owned library and the 
county toll-road disappeared most naturally together? 

If the street cars were operated upon the same pnnciple 
as the rest of the avenue, and the house-lights the same as 
the street lights, would robbery ensue? Would people 
take the time to ride needlessly in order to defraud the 
community? They would soon tire, or the fresh air would 
clear their brains. Could they defraud it? They might 
give cost to the community, but they could carry home 
with them nothing of value to themselves, except expanded 
lungs and memories of field and sky, worth infinitely more 
to the community than the cost of the two-cent car-ride. 
Would people be tempted to sit up o' nights in order to 
waste light? What could they gain thereby ?— except 
temptation to read or to think, of inestimable value to the 

community. . . . ^ .. 

When will the simple old distinction of Proudhomme 
be understood? That '^property is robbery and posses- 
sion liberty "; that when the use and enjoyment of a thing 
is assured to one the very selfishness which before de- 
manded ownership now urges one to avoid ownership. 
To-day men ruin our government and themselves in their 
fight over street-railway and lighting properties, givmg 
millions for the privileges,— because there are profits arti- 
ficially and unnecessarily attached thereto. Were the 
work of furnishing illumination all done at the gas-works 
by labor and superintendence, with wheelbarrows and 
pokers, amidst heat and soot, and not at all at the down-" 
town offices,— with no profits, no stock nor bonds, no 
dividends, no share-holders, no presidents and treasurers 
attached, like the post-office,— would there^ be such a 
struggle on the part of the silk-hats to get in? Would 
ten dollars a day, or ten times ten, hire them to enter r* 



473 THE COST OF COMPETITION 

It is all of these factors which must be remembered in 
trying to compare bargaining with cooperation, and their 
comparative ethical results. The library reveals them all 
clearly because it comes only slightly into contact with 
money-making. The cheaper publishers attempt to foist 
upon librarians books unworthy of admittance, it is true; 
but the latter are professional men, upon salaries from the 
people, and are in no wise dependent upon the publishers : 
as the post-office authorities are, for instance, upon the 
great money-making corporations which corrupt them. 
The post-office cannot conduct its daily work without 
reliance upon and contracts with profit-seeking railroad, 
steamship and supply companies. It is in these relations 
that all the scandal arises. But within the library, because 
the use of the books is not sold at a price, there can be no 
profits made. Dishonesty on the part of librarians or 
assistants can avail nothing. It is the one public service 
which supplies individual citizens which is operated solely 
for the sake of the service, no money being handled. 
Therefore the service is good; the books are good; the 
intangible gain to the community is unquestionably many 
times its cost. It is the one most important service to the 
community, after the necessaries of life and transportation 
and communication are attended to; yet it figures very 
little in cost of maintenance and not at all in " vested 
interests," listed securities, dividends or coupons; in its 
" promotion,'^ its financing, its advertising, its *' estab- 
lished trade." Its patrons seek it, as alone is natural, 
not it its patrons. 

Journalism, Fiction, and the Stage. There Is yet 
one other item of community-life which must be briefly 
referred to here, as throwing bright light upon the ethical 
effects of competition, because it suffers so palpably from 



THE COST TO THE COMMUNITY 479 

them. This is journalism. The same forces are at work 
in the creation of the present flood of^ cheap romantic 
fiction and of the intellectual degeneration of the stage 
as in the rise of yellow journalism, it is true; but journal- 
ism exhibits them the most clearly. It will be discussed 
alone, in illustration of the others. 

Journalism presents a peculiar combination of the pro- 
fessional and the commercial. Its leaders are drawn 
from the very first walks of life. College-bred, well 
read, cultivating at every step breadth and charity of 
view: as individuals they are able and by taste they are 
inclined to furnish us with a compote of daily news which 
is really an inspiration, drawn from the best current 
doings of the entire world. But they do not do it. 

The degeneration of the newspaper arises from a single 
corrupting force : profit-seeking. This ^ operates detri- 
mentally both from within and from without, but espe- 
cially from without. 

In the first place, each sheet experiences horizontal 
competition with its neighbors, against which it must 
strive for life. It must maintain its circulation or lose 
its existence, and with it its least power for good. In 
this it suffers in common with all professional attempts 
at the attainment of high standards of art. Turn, for 
instance, to the man who wrote too well to be a journalist: 
Kipling. In his "Light that Failed" he has Dick 
preach a sermon to Maisie, to the effect that good work 
can only be done while one is unconscious of self and of 
success. But the competitive system forces every striver 
in artistic lines to have one eye cocked always for success, 
since only by success can he live. He is not awarded an 
income by the art-loving public according to the quality 
of his work; he must abandon quality in order to produce 
quantity. He must appeal to the greatest numbers; for 



48o THE COST OF COMPETITION 

his managers, operating commercially, choose their pro- 
grammes solely according to the audience which they will 
gather, to the profits which they will return. No atten- 
tion is paid to an auditor's taste ; it may be good or atro- 
cious; if he has a dollar ready to pay, that settles the 
question; he shall be served with what he prefers. So 
the artist must play to the galleries, because the galleries, 
thumbs up or thumbs down, declare literally whether he 
shall feed or starve, live or die. Mr. Kipling wrote this 
book in the hope of combating self-conscious effort. 
But the entire volume, outside the sermons, voices the prev- 
alence of forces to the contrary which are infinitely more 
powerful than exhortation: the enforced struggle for 
comparative recognition. Dick's life speaks it. Mr. 
Kipling's does the same: for to the present writer his 
sentence to oblivion, for a time at least, was written by 
Kipling himself, in a review of one of Mr. Bullen's sea- 
tales, in a remark to the effect that " the material pre- 
sented was sufficient to have made five books." When 
the prostitution of literature to the manufacture of books 
comes in, the inspiration being measured in terms of the 
amount of copy it will produce, the man's fate is sealed. 
Out of the ashes of the murdered muse, if the writer learns 
and repents, may arise the incarnation of a new one ; other- 
wise his art and his fame are dead forever. 

This is what is the matter with journalism. The muse 
is not, indeed, impaled upon the copy-hook. Space is 
usually in demand more than copy. But she is outraged 
by the scareheads and the sensational and sporting news 
which is relied upon to catch the taste of the public major- 
ity; for no regard is paid to the quality of the clientele. 
The two cents of the newsboy is as good as that of the 
Academician. And as the lowest tastes and tendencies 
are the ones which open the pockets most promptly upon 



THE COST TO THE COMMUNITY 481 

excitation, those are the ones to which constant appeal is 
made. The more sensational the matter the greater the 
profits. Only the extremity of public opinion and the law 
bars out sheer obscenity. 

To the character of this audience of journalism further 
reference will be made a little later. In the meantime 
it is desirable to point out that the forces on the inside, 
in journalism, are worse yet. There are very few sheets 
which maintain their circulation by either the high literary 
quality of their editorials or even by the literary taste with 
which the paper is put together. Circulation is not 
directly the mainstay of existence. The daily paper lives 
upon its advertising. Circulation enhances the value of the 
advertising-space, of course; but the latter Is worthless 
unless utilized. It must be kept filled against all the com- 
petition of the other local papers. 

The order of Importance of the different sorts of self- 
sustaining effort In journalism, therefore, may be stated 
as follows: 

( 1 ) To secure advertising matter; 

(2) To secure circulation, In aid of the former; 

(3) To publish the news of real Importance; 

(4) To publish the best possible editorial review of 
the day's events. 

Note, In the first place, the order of Importance. No 
desire or aspiration In (3) or (4) may find expression if 
it antagonizes either of the preceding alms. No news 
must be printed, no editorial attitude taken, which may 
offend large advertisers or large bodies of subscribers. The 
news and its manner of presentation. In scareheads and 
sensational contents, must be debased to the task of secur- 
ing circulation; the editorials to that of currying favor. 
Our journals have exactly the same problem of Intellectual 
Independence invaded by need of pecuniary endowment 



482 THE COST OF COMPETITION 

which threatens the proper usefulness of our universities, 
our theatres, and our churches. 

In such negative fashion does the competitive system 
inspire man's highest literary afforts ! Is this the honored 
Muse, triumphant, in a wagon hitched to a star? Is not 
rather the rider before the cart, the Muse harnessed as a 
draft-animal, with blinders, that she may not see how 
unhappy is her own plight; and in the wagon behind the 
blinders a very mundane burden : a golden calf, heavy and 
uninspiring? 

Taking up the numbered list seriatim, effort in the first 
direction is purely commercial in its nature : unalloyed bar- 
ter, the acquisition of influence over men. 

Effort in the second direction is the same; but it mas- 
querades very successfully as reportorial work. It con- 
sists in publishing spicy reports of sensational local inci- 
dents, in embellishing them with the most startling of 
scareheads. No man of literary taste would ever think 
of presenting facts in such a manner except for hire. Yet 
It gets to be an unconscious habit. For instance, a local 
sheet furnishes these headlines : 

"AGED LADY DEAD." 

" Was One of M bury's well known Residents." 

"STENCH SOMETHING AWFUL." 

To be sure, In this case the sensational becomes prominent 
from an unfortunate juxtaposition of the news of the 
death of an estimable citizen and that of a break in the 
town-sewer; but its unconsciousness illustrates the care- 
fully cultivated tendency to shout out something terse, 
coarse and incisive, as the newsmonger's first duty, better 
than would a more deliberate offense. It typifies the 
explanation of why it is that, in a million cases, our better 



THE COST TO THE COMMUNITY 483 

taste Is jostled and jarred by the coarse and incongruous. 
It makes plain why it is that even in the journals furthest 
removed from the " yellow," there is no effort, made or 
pretended even, to give news prominence in proportion to 
its real importance. It is displayed with sole regard to its 
probable influence over the purchasers of the paper. In this 
it addresses the millions. With them it appeals to the 
impulses which most promptly open the pocket : to a sharp 
little stir of the baser passions. If it possesses an audi- 
ence already cultivated, by other forces, into response to 
appeals to the mind or the heart, it also pays to somewhat 
excite the populace in these directions; but there is always 
more profit in the cultivation of the baser side of life. In 
any event, the dependence upon profit for existence forces 
the press to be a servile follower of public taste and 
opinion, instead of the leader which it ought to be. It 
cares not at all for the individual opinions and consciences 
of its editoral staff. It cares very little for the patronage 
of the minority of the community of superior intelligence 
and taste, who would pay a much higher price for a reli- 
able, impartial sheet devoted solely to the most important 
news and to editorial review; for to cater to them would 
be to lose the much larger volume of low-price trade; and 
volume of circulation, not quality, is what gives value to 
the advertising-space. 

The circulation of the daily press depends upon the 
skill with which it plays, as upon a harp with a single 
monotonous and defective string, upon a certain weak 
tendency of the times, a tendency which reveals how insidi- 
ous and universal are the evil effects of competition upon 
our national tastes and actions. This tendency deserves 
especial attention. 

The competitive system leads to overexertion upon the 
part of all, high or low, except a few whose incomes are 



484 THE COST OF COMPETITION 

drawn from Inherited accumulations. The only limit to 
the exertions of either the business or the laboring man Is 
his inability to do more. Either exhaustion or overten- 
sion of the nervous system are the American trade- 
marks. 

The recreation of an organism In such a condition as 
that must always consist of a distraction of some sort. If 
the nerves are worn out by extreme effort In one direction 
they must receive artificial stimulation before pleasure can 
ensue from activity in another. If they have been 
wrought Into intensity in one line of work', although there 
may be no consciousness of fatigue or exhaustion, only 
sharp sensations will avail to draw them off from their 
fixation upon work into fixation upon anything else. 

For Instance, there has been no time In the history of 
France when the theaters of Paris were better patronized 
than during the Reign of Terror. At a time when super- 
ficial reasoning would predict gloom as enshrouding the 
entire city, preventing all relaxation in amusement, a 
knowledge of the law of equilibrium in biology regards 
the feverish gayety of such a time as only natural. It is 
inevitable that we must play as we work. Not only must 
we have as much of the one as we do of the other, but it 
must be of the same sort: the natural recreation will be 
strenuous, exciting and exhausting, or calm and elevating, 
entirely according to the character of the work prescribed. 
President Roosevelt advises strenuous play that the work 
may be strenuous. Right, if strenuosity is the most desir- 
able life. But there is such a thing as Inefficiency from 
overexertion. It Is at present the curse of this country; 
for it inevitably begets three things: 

(i) Error due to lack of deliberate and penetrative 
reflection, whereby less is accomplished than 
otherwise might be done with less exertion ; 



THE COST TO THE COMMUNITY 485 

(2) The natural reaction, in the second generation, to 

the opposite extreme: unconquerable laziness; 

(3) The need for overintensity of recreation, which 

is the prime instigator to all vice and crime. 

It is these secondary effects of the overexertion coerced 
by barter which have indelibly stamped upon the present 
generation its tastes in literature, daily or otherwise. It 
is the short story, briskly told, or the sensational novel, 
which stand supreme in book-work. It is the picture, as 
spicy as possible, which makes the periodical. It is the 
" scarehead " and the brevity and incisiveness of the 
reportorial work which wins circulation for the daily 
journal. It is the play of sharp wit and questionable 
morals, spectacularly staged, the comic opera padded with 
horse-play or the variety of the vaudeville programme 
which " takes." Those who run as they read do not pre- 
tend to digest or reflect. They do not even care to absorb. 
" In one ear and out the other " is the motto of the news- 
paper-reader. 

Ninety-five per cent, of the reading done of daily 
journals is of the same hideous sort of debauchery of the 
mind that the degenerate Romans used to exercise with 
the stomach : gluttony relieved by artificial, unnatural 
rejection, and carried on from the lowest of motives: the 
overtitilation of sensory nerves finally become too tired 
to respond to ordinary wholesome excitation. Only let 
the matter be graphic and sensational enough to arrest 
and divert the weary attention for a moment from the 
grim demands of the daily struggle ! Only let it not be 
a thing to stay by one, demanding serious consideration, 
effort at understanding, digestion, reflection, offering its 
addition to life's accumulation of wisdom! For there is 
no time nor strength for such things in the competitive 
campaign. He who preserves them must give up all 



486 THE COST OF COMPETITION 

economic hope and drop resignedly into the ranks of the 
unpaid: the laborers, the scholars and the artists. 

It is to such an audience as this that journalism neces- 
sarily caters to-day and by the verdict of which it lives or 
dies. The survival of the sensational is inevitable. To 
contemn the *' yellow " journals from a platform of supe- 
rior morality is at once specious, futile and hypocritical. 
They are not only doing just what every other business- 
man in the country is doing: seeking trade, without too 
fine a question as to the nature of the means or of the 
incidental results, but they are doing it because he is doing 
it. They cannot possibly stop; they must inevitably get 
worse and worse, until he stops. So let him who has not 
sinned to the extent of seeking trade and profit, in ways 
not lending to the glory and improvement of his native 
land, cast at fallen journalism the first stone. When he 
has purified himself he will find, mirahile dictu, that her 
garments are already clean. 

Let barter be but abolished and journalism will rise 
from its present bed of mud as a whitened angel. Of 
advertising there will be no more. Bulletins there will 
be, in plenty, but not often of prices; only of real novelties 
on the market. Fruits may change their prices once a 
week, fish and meat once a season; the rest of the staples 
will alter their prices so seldom that, there being then 
no longer any question of where to buy, there being only 
one dealer and one price, the question of prices, even after 
the pattern of present market-reports, will be unknown as 
news ; they would probably occupy separate bulletin-sheets. 

The newspaper will then consist of just two things : ( i ) 
The report of things done; (2) the expression of editorial 
opinion in review of current events. Neither will be done 
with a view to curry favor with the multitude; they will 
be guided solely by the conscience and good taste of the 



THE COST TO THE COMMUNITY 487 

writer. The Income of editor and reporter will be as 
assured as Is that of the press-foreman to-day : liable to be 
lost at any time for poor work, but not consulting the 
rabble as to what constitutes poor work. As the press- 
foreman to-day receives his appolntement at the hands of 
a circle of gentlemen who have proven their competence 
to judge his work, so the journalist of the future will be 
accountable only to the highest literary lights of the coun- 
try In his search after fame and success. Of them he will 
be one. He will be on continuous trial by his peers. As 
to his fate the people who enjoy reading only of prize- 
fights and divorce-trials shall have not one word to say. 

This Is not an outline of a thing which, it Is hoped, may 
be enforced. It is the only thing which can possibly come 
to pass If barter be once eliminated from industry. 

Art and Aesthetics 

It IS one of the unfortunate results of the prevalence of 
competition that there is very little else with which to 
compare it. Just as in economics the services carried on 
cooperatively are few and small, so, in the department of 
the jfine arts, the existing Instances of expression of taste 
which can be regarded as representing the community are 
comparatively few. In fact, outside of defense, sanita- 
tion and the supply of material commodities, we have 
almost no community-life. The body politic, as an entity, 
is as yet in its savage state, concerned chiefly with war and 
food-supplies; giving, as an organized unit, almost no 
care to education and the fine arts. This is where many 
European states which are far behind us In political or 
economic organization surpass us to a marked degree. 
It has been shown how the community is affected by bar- 
ter in several lines which border closely upon, if they not 
appreciably enter, the field of pure aesthetics. But in 



488 THE COST OF COMPETITION 

none of these particular lines is there any real community- 
action; all is organized upon the commercial basis. 

The lines in which the community itself attains oppor- 
tunity for the expression of standards of taste are four in 
number only: Architecture, landscape-gardening, prelim- 
inary education and the library. There is enough evi- 
dence, however, within these limited fields to establish 
plainly one broad rule of aesthetics : 

All that is beautiful in our community -life can he 
traced directly to cooperation, all that is hideous to barter. 

In discussing this proposition extreme care must be taken 
to correctly identify the cause and the effect. To throw 
light upon the study in hand it must be certain, in every 
instance, that economic, not ethical, forces produced the 
aesthetic result in question. For instance, suppose that 
a man accumulates a fortune in establishing a great busi- 
ness, in the usual way. This he bequeathes to his son, 
who is also able and who continues the prosperity of his 
patrimony. Suppose that the grandson, in consequence, 
grows up in comfort, with a proper degree of freedom and 
responsibility to develop character and enough of luxury 
to develop taste. Suppose that he traverses college as 
most boys do, drops into a place prepared for him in his 
father's business, leads a quiet, useful life and at sixty pre- 
sents to the community a beautiful park, tastefully laid 
out, a public building of inspiring outline, a new school 
nobly planned or a skillfully selected library. What is 
there here of cause and effect between economics and public 
aesthetics? Nothing at all. Do you insist that eco- 
nomics enter as a cause? Then include in the analysis of 
how he acquired his leisure the travail of the visible hun- 
dreds and the invisible thousands which his leisure has 
cost? What destruction of taste has there been there? 
Do you insist that aesthetics appear as an effect? All 



THE COST TO THE COMMUNITY 489 

the world knows, and long has known, that the first essen- 
tial to the growth of taste is leisure. To further under- 
stand why this is so is a problem in physiological psychol- 
ogy, or in the evolution of the human body, not of 
sociology or the evolution of the human community. 

The value of leisure for human progress has for centu- 
ries stood as the excuse for the earliest political slavery. 
How the first steps out of savagery into civilization might 
have been made for the few without the slavery of the 
many, we cannot well say. That is the way they actually 
were made, and we can imagine no other. But by the twen- 
tieth century, or even by the middle of the nineteenth, this 
excuse had grown too old. The cost to the many of that 
method of securing the leisure of the few had grown, in 
our Southern States, at least, too great for tolerance. It 
was demanded that the many, the all, have, if not leisure, 
at least the freedom to acquire it. The demand was ridi- 
culed, resented, resisted, at cost of all leisure and peace to 
millions; but it was granted. 

The queer thing about this topic Is the widespread 
confusion of mind between the necessity of leisure as a 
preessential to cultivation and the supposed necessity for 
the oppression of the many as a means to that leisure; 
although this oppression was merely an incidental price 
paid for the leisure of the few because no one then knew 
how else to obtain it. That the few must have leisure in 
order to be aristocratic is vehemently supported by those 
few. That the masses would be equally cultivated if they 
possessed equal leisure, that they never can become culti- 
vated until they do possess leisure, is just as vehemently 
denied. 

Now, in the twentieth century, we are witnessing a 
culmination in the history of barter quite similar to that 
of the nineteenth century in the history of slavery. That 



490 THE COST OF COMPETITION 

barter has always led to the leisure of the few, and hence 
to their better development, within certain limits, it were 
absurd to deny. But the plan has been outgrown. It not 
only now costs too much to too many, but it permits a too 
mediocre development to the favored few. That these 
last are now lagging further and further behind the ac- 
tual progress of the arts and sciences in the hands of the 
higher wage-earners, even hampered as they are by their 
$2000-starvation-wage, has already been pointed out. 
The fact that an occasional rich man overcomes or evades 
his disadvantages and becomes cultivated, in spite of the 
processes which gathered his cash, is nothing relevant 
whatever. How far both rich and poor are behind what 
they might be in these matters it is the province of these 
pages to dimly suggest. 

Architecture and the Streets and Parks. Here 

the comparison between public and private taste is almost 
that between something and nothing. Our public build- 
ings alone of all others possess anything worthy of the 
name of architecture, any elevation of outline, any techni- 
cal propriety of detail. The only other buildings offering 
any approach to the artistic are the dwelling-houses of that 
minority of the rich minority who have sense enough to 
really live in the country. No city-house can possibly be 
beautiful; it has no room to be. No temporary summer 
home can offer the highest beauty; It lacks the spirit of 
the Penates. As for the dwelling-houses of the really 
poor. In city or country, the less said the better. The 
dwellings of the middle class of wage and salary-earners, 
In communities of moderate size: the modest frame and 
plain brick houses occupying the quieter streets of small 
towns, constitute what Is really our only typical American 
architecture. They present a truer expression of natural, 
harmonious community-life than anything else we have. 




Advertising Signs 
The Competitive Distribution of Information 



THE COST TO THE COMMUNITY 491 

In so far as they do so they are beautiful. But that they 
might imaginably be raised to a far higher standard of 
design and execution, while still retaining their natural 
simplicity, any artist will gladly admit. 

Of private business-buildings hardly a syllable of excuse 
can be said. It is these which naturally express the busi- 
ness-world, with its planlessness, its congestion, its con- 
stant internal strife, its haste, its parsimony of space and 
taste, its vulgar prodigality of what money can buy and 
Its eternal password: *' Comparison, comparison! " Within 
these buildings, for factory or for office, there resides 
no peace, no harmony, no gentle consideration for others, 
no dignity nor deliberation, no high ideals of beauty, 
except as they exist in defiance of the relentless system 
about them. Individuals there may be, in commercial 
authority, who are dignified, deliberate, considerate, and 
tasteful: but their skill, as they compete, begets the loss 
of these same things for millions of wage-earners about 
them. It is quite fit that the buildings which house their 
efforts should be what they are : the most hideous jumble 
of the incongruous, the planless, the distorted, the tawdry, 
which it is possible to conceive as compatible with the 
wealth which they produce or handle. 

If exception be taken to this, if one points to the better 
factories of the day, surrounded by superficial attempts at 
grass and geometric flower-beds, or at such buildings as 
exhibit truly beautiful decorative detail, in contravention, 
the reply is easy. They illustrate two things: the protest 
of individual good taste against the natural fruit of the 
competitive system, and the beginnings of the substitution 
of cooperation for competition. But it is little progress 
that either can make. The same cooperative links between 
man and man which, in economics, have gained for the 
country sufficient increase in productive efficiency to over- 



492 THE COST OF COMPETITION 

balance the steadily increasing proportion of destructive 
competition, are beginning to make themselves felt, In 
aesthetics, in sporadic progress against the degenerative 
tide of competition, — for within the factory-walls is per- 
fect cooperation; but the factories are governed by the 
offices, and they are exclusively devoted to barter. 

Our public buildings, on the other hand, are uniformly 
of a high standard of archltectual beauty. Each has Its 
technical faults, no doubt; but as a class they represent 
the best we have. In them is no disposition to compress 
or to distort to competitive ends; there Is no need for It. 
Land enough is used to obtain perspective. Dimensions 
are chosen with an eye to Its utilization for good effect. 
Every one of them speaks the dignity and the solidarity 
of the cooperative state. Most of them suggest the pos- 
sibilities of Its refinement. 

Compare the series of them : the state capltols, the county 
court-houses, the city libraries, the federal buildings at 
Washington, with the average buildings Inspired by " Indi- 
vidual initiative " In business which adorn our streets ! 
Look at the latter collectively ! Distorted, compressed to 
the narrowest, with no space for effect, with none to offer 
were there space to perceive It, with every line cut short 
at the end of its money-making power; with Its tawdry 
best face forward, with no sides at all and an unspeakable 
rear; with no regard whatever for harmony with Its 
neighbors, — compare the architecture of the competitive 
community with the worst of our public edifices ! 

Here, as at every turn. Is a plain glimpse of what " Indi- 
vidualism " means. Were not all of these buildings, 
public or private, the work of Individuals? Is not the 
Boston Public Library, with the mural decorations within 
and the books upon its shelves, just as much the work of 
Individuals as is any stilted down-town office-building, with 



THE COST TO THE COMMUNITY 493 

its load of ledgers and weary stenographers? Is not the 
entire difference this: That when the object In view Is the 
service of the community the Individuals are hired to do 
the best their Inspiration can create; but that when private 
profit Is the motive power the Individuals are hired to do 
the worst which they will allow to leave their hands? Not 
that ugliness Is Itself desired; but that, unfortunately, that 
one thing which is hopelessly Incompatible with any beauty : 
of heart or mind or house or handiwork: private profit, is 
preeminently desired, must be desired, upon pain of eco- 
nomic extermination. That Is the inspiration breathed forth 
by every square foot of surface of our commercial 
streets and buildings: ugliness and selfishness; the ugli- 
ness of systematized selfishness.^^ 

This is what deforms the factories, too. Poor Rus- 
kln's soul was torn with the Idea that factories were Inher- 
ently and Inevitably ugly and that there was so little hope 
of future riddance of them. But they are not. ^ Every 
dollar that can be spent upon them which will improve 
their time and effort in production Is spent upon them; 
because the designers, their owners, are thereby able to 
place the difference within their pockets. No one In 
authority, on the other hand, has the sllghest incentive to 
make them beautiful: the owners are busy In town and 
seldom see them ; the operatives have had taste and leisure 
squeezed out of them. Neither has any more use for a 
pretty factory than a New England farmer of 1840 had 

18 Dr. Emil Reich, in his "Success of Nations," says:^ "Art, when it 
becomes the monopoly of a limited but governing class, instead of being 
the aim and object of national ambition, is doomed to early sterility. Art 
will never consent to become the luxury of those who can aiford to pay. 
The combined fortunes of a dozen industrial millionaires will do nothing 
toward inspiring a masterpiece." . . . "A growing faction whose 
immunity from the cares of everyday life is due to the ' sweating ' of a sub- 
servient population of peasants or fellaheen will ever remain intellectually 
impotent." 



494 THE COST OF COMPETITION 

for a veranda. The people who do desire beauty of 
surroundings, who represent the taste of the community, 
have nothing to say about the factories. 

This situation is entirely artificial. There is no eco- 
nomic reason, competition once abolished, why the present 
cost of each factory should not be repeated in efforts at 
beautifying its exterior, its interior and its surroundings, 
while the community were still richer, as a result, than it 
Is now, — and this upon the basis of existing methods of 
production, too. There is no engineering reason why all 
the smoke, dust, noise, tall stacks and desolated ground 
should not be abolished. But this cannot be accomplished 
without cooperation. The engineers have never been 
called upon to do any factory-designing of any size under 
these conditions. When they are, Ruskin's reincarnation 
may rejoice in life or his weary soul rise in peace out of 
Purgatory. His true task, seen not clearly by himself, 
will then have been accomplished. 

This one topic might profitably fill a volume. Here 
it must be reduced to a few simple statements. One fac- 
tor, however, is so cogent In molding our standards of 
architecture and out-door art that It must receive some 
special attention. This factor is congestion. 

Congestion. Of the original causes of congestion 
nothing more need be said than what has already been 
stated in Part I. There It was shown how purely 
economic forces, not of the Individual and his biological 
tendencies but of his legally enforced relations, have made 
natural the growth of the sky-scraper and the paved street. 
These things exist for the purposes of commercial compe- 
tition. So long as competition continues to exist and to 
return to Its devotees, as it must, the maximum incomes 
paid, just so long will the best engineering skill of the 



THE COST TO THE COMMUNITY 495 

country, and billions of capital, be devoted to cherishing 
this tendency toward congestion and ugliness. In the 
future, if we make no alteration in our method of eco- 
nomic organization, it must be expected that tunnels, ele- 
vated roads and bridges will multiply; speeds will increase; 
improved elevators will make the fifty-story building as 
feasible as is now the twenty-story; flying-machines may 
soon add their enormous possibilities to the impulse. 
Under these permits buildings must inevitably become nar- 
rower and higher; the streets, already stony, gusty canons, 
must become still straiter crevasses, or even tunnels, by the 
addition of upper stories of their own, or perhaps mere 
bases to air and light-shafts. Architecture as an art, 
already choked and discouraged, will then have departed 
in despair. The underlying point of all design will have 
become the acme of compression, congestion, distortion, 
into the highest possible intensity of contact between man 
and man, the highest possible speed of circulation. 

Of such clay is modeled the popular prognostications 
of the future city. These pictures, of pen or pencil, 
appear occasionally. But they are all based upon premises 
which are false because too narrow. A single tendency 
impelled by a single force, in the ascendency for the time 
being only, is supposed to develop without regard to its 
natural time-limit of phase or to the increasing lack of 
equilibrium. These pictures disregard the fact that the 
very speed and Intensity of the growth of congestion 
implies, by natural law, a corresponding speed and inten- 
sity of reaction from It. The congestive tendency of the 
present is the visible resultant of a single Institution, 
commercial competition, which for the past half-century 
has experienced a phenomenal degree of unrestricted and 
encouraged growth. If It cannot be imagined except as 
continuing Indefinitely In the future In unrestricted growth, 



496 ..THE COST OF COMPETITION 

then what we have pictured must be the result. If, on the 
other hand, we imagine it abolished, if we observe that it 
is about to abolish itself, if we recognize that its natural 
span of life is already exceeded, its later days being already 
full of pain and tribulation; if w> remember that there 
are other and more basic forces within. the social configu- 
ration which are certain to resent the extreme action of 
this one ; if we remember that barter is a pure despot, on 
the throne as the sovereign of our destiny by inheritance 
rather than by right or fitness and that the wholesome life 
of a community is always able to dethrone despotism, by 
means constitutional or by violence, whenever it may 
become indubitably worth the while, — if we remember all 
these things, then will this congestive tendency abandon its 
despotic sway over our imaginations and our aims. 

This congestive, deformative tendency will then be re- 
placed by a reverse process, in fact, as energetic as is 
the present exaggerated congestion. The sky-scrapers 
erected in record-breaking time will sink still more rapidly 
out of sight. Fifty years has put them up; twenty will 
suffice to bring them down. The streets will broaden 
spontaneously, the noise will die away, the haste that is 
made of waste will give way to the dignity of movement of 
conscious power, and the green park-germs will grow and 
expand until they fill all places. Streets will have given 
way to avenues and boulevards. Man, no longer desiring 
to be within clubbing-distance of his neighbor, will be con- 
tent to telephone, by underground lines. The present 
army of stenographers and clerks, due to the infinite mul- 
tiplication of accounts and of communications, a genus 
indigenous to tall office-buildings on canon-streets, will 
have dispersed forever. The hundred thousand separate 
offices and responsibilities, needed for the numerous petty- 
officers of that vast civil strife which we call commercial 



THE COST TO THE COMMUNITY 497 

competition, will have become a thousand, or less, all the 
branches of a single purpose : that purpose the harmonious 
direction of an hundred times the present quantity of pro- 
ductivity. A half-dozen office-buildings, handling the 
communications concerned with production only and none 
concerning price or ownership, will suffice to replace every- 
thing now south of Canal Street, — except the few little 
factories, and they will have fled to Indiana and Texas, 
where they belong. Space and light and fresh air will be 
no longer at a premium; dimensions will no longer cost 
dollars, as now, in geometric ratio. Commercial New 
York, as we now know it, will have disappeared. Residen- 
tial and official New York will line the Hudson for one 
hundred and thirty miles as It now does for thirty, and 
have become a park incidentally to its expansion. Man 
will have become free, and therefore natural, once more, 
and will build only what he enjoys building and living in 
and looking at; he will no longer be tempted to build what 
he is hired, as a tool of a despised master, to throw off for 
the sake of furthering commercial competition. The 
sheet-iron cornices In imitation of marble masonry will 
have followed the frantic advertising-signs, into oblivion. 
What will it all be, in detail? That each one must 
answer to his own best light. Pick up your best examples 
of free, inspired architecture ! Look at the public build- 
ings which we feel, even now, shelter but improperly the 
dignity of our community-life, fragmentary as it is ! Turn 
to any federal, state or county capital for reply. Look 
at the World's Fair buildings, designed for the fame and 
the glory of work well done. In pure emulation, but not 
for money, not In competition ! Think of the national 
bazaar which future days must see grow up In each of 
our cities, wrought in marble, to the glory of the flag for 
all time, as they were there done in staff ! Think of 



498 THE COST OF COMPETITION 

Grant's tomb and the Palisades Drive, with the vista of 
the Hudson for a background! Imagine our public 
parks and monuments all become free to grow, cherished 
by our best pride and endeavor, now no longer absorbed 
in barter ! Draw from your best memories of Windsor, 
of the Champs Elysees and the Arc de Triomphe, of 
Heidelberg and the Wartburg as they once were, of the 
Acropolis, of the Taj Mahal, of any masterpiece of human 
monument where environment has been fully utilized to 
bring out the beauty of architecture! Turn from these 
to the Congressional Library at Washington, or the Bos- 
ton Public Library, whichever tendency you prefer! 
Place behind the human aspirations visible in all existing 
art that combination of American skill, energy and devo- 
tion which is now absorbed and expended in organizing 
commercial warfare ! Let the whole thing grow, for fifty 
years, as the steamboat and the electric spark have grown 
in the past hundred, as commercialism itself has grown in 
the past fifty years ! Go back to your father's childhood 
and ask the world what will the railroad be and what the 
western limit of American civilization in 1900! Let the 
magnitude and the irresistible power of future expansion 
which these things suggest to you be a measure of what 
will occur very shortly to all in which we now rejoice as 
beautiful, of parks and boulevards and dwellings: the 
reversal of all congestion. Such expansion will then have 
become a fact, with as little regard to present popular 
opinion concerning the probable or the possible as have 
the transatlantic steam-ferry and the American Philip- 
pines. 

Is this a dream ? Is the trolley-road, greatest factor in 
present urban configuration, a dream? Thirty years ago 
it was merely a dream. Ten years ago it was widely ques- 
tioned. Is slavery now a fact? Fifty years ago it was 



THE COST TO THE COMMUNITY 499 

called the institution of the ages, founded upon the Bible, 
stable as the eternal hills, its abolition a dream. Is the 
abolition of barter a dream? Why, it is already a race 
between all parties to see who may most quickly kill all 
horizontal competition. Only the vertical is left, practi- 
cally. Science and invention contribute daily to the links 
between the industries which knit them too closely for 
further competition, which whet emulation by bringing 
men more closely side-by-side instead of face-to-face. 
Every man in business throws his best strength against 
horizontal competition and toward consolidation; Into 
pool, trust or agreement if the law allows; into still firmer 
consolidation If it does not. Already are the people begin- 
ning to exterminate vertical competition by their votes: 
for governmental coal-mines, for municipal light and heat, 
for downright socialism; not fast enough to parallel the 
growth of barter at the hands of the barons of Industry, 
who are urging It toward a tottering Instability faster than 
can all argument, but enough to disturb the conservative 
press and the political platforms. Competition will be 
gone from us, by natural gravitation through Invisible 
pores, as of water through sand, before we know It; but 
if not, then it will be gone by national surgery. In relief of 
cancer. Whether we love it or whether we hate It, 
whether we be socialist, anarchist or conservative politician, 
merchant prince, financier or day-laborer, our every act 
drives daily on the car of progress toward the fatal Insta- 
bility of the present system, away from commercial com- 
petition as an accepted public institution and toward the 
recognition of the only alternative: universal emulative 
cooperation as a national principle. 

In all these and In less tangible, indictable ways does 
the Instituted method of determining price and ownership 



500 THE COST OF COMPETITION 

by barter undermine the moral and aesthetic standards of 
our community-life. The big flaws can be listed and 
arraigned. But what can be said of all the little ones, of 
the thousand-and-one ways in which the ethics of the mar- 
ket have invaded and perverted our daily lives? 

All social intercourse is ruined by it. The men are 
too tired at night or too much " upon the road " to enjoy 
even their own family-life, not to mention any true com- 
munity of mind and soul, could they get it. But they can- 
not get it. The whole social code Is turned over to 
womankind for direction, and woman Is one of man's ribs : 
if he makes comparative advantage of Individual over 
Individual the criterion of all material worth, of all per- 
mission to live, how may she do otherwise? How may her 
social functions be designed for other than purposes of 
comparison ? Is it not inevitable that her every dinner or 
at-home, or even each little afternoon-tea, must be one 
degree more elaborate, more " recherche," than that of 
her neighbor and rival, or her husband's competitor's wife, 
or It Is worthless? Must she not be careful to choose her 
guests to the promotion of her husband's " interests "; or 
if she chooses some whom she really likes, can they come, 
not being able to wear a new gown? True wife, her 
very devotion leads her in the footsteps of Eurydlce, 
downward, into the odium of systematic comparison. It 
Is but natural, under the conditions, that her friends can- 
not be cultivated by her because they are worthy so much 
as because they possess wealth and power, dress well, enter- 
tain " well " and succeed in snubbing a little more gener- 
ally and relentlessly than she. There will always be the 
fops and fools In the land, the Lord knows, but Is It nothing 
to the detriment of our civilization that to the fops and 
fools should be artificially accorded the means for the 
preferment of the ostentatious to the beautiful; and that 



THE COST TO THE COMMUNITY 501 

to them should be added so many others who, wishing to 
be true and right, yet cannot afford to drop behind in the 
race for display? Is it not a national mistake of conse- 
quence that to those who reject from their lives all but the 
true and the beautiful and the considerate must be lost 
at the same time all right to that leisure and material 
competence which alone permits true social intercourse? 

At every turn of life the Insidious poison of barter dis- 
figures and annoys. It is not alone that it maintains our 
slums and Tenderloins, creates our Iroquois Theater and 
*' General Slocum " horrors and fills our political machines 
and prisons. In each moment and each minor way of 
life its ugly Inconsiderate spirit can be detected, as the 
guiding one of life-conduct, In Its work of undermine and 
desecration. It is barter which crowds our street-cars and 
gives us hideous Inanities of advertisement to gaze at as 
we ride; which impudently tosses unrequested joke-books 
and caramel packages Into our laps; which orders us to 
" step lively there ! " and fills our public places with bar- 
baric confusion and cynical discourtesy; which fills the 
periodicals which It sells with two-thirds blatant advertis- 
ing-matter and one-third silly pastime reading-matter, If 
no worse; which peoples our Babel-streets with shrill- 
voiced precocious newsboys and hoarse-voiced untutored 
truckmen; which overloads the wagons and forces the 
gaunt specters of what might be proud horse-flesh to share 
the cruel strife of the masters; which harnesses us In what 
Walter Crane calls " tubular " clothing, most efficient for 
expressing the alertness of the gladiator, as fit for the 
expression of truly civilized, cultivated taste In dress as is 
plate-armor; which chooses for us our slang forms of 
speech. Indicative ever of the jauntlness of the boxer; 
which ruins our teeth and our stomachs with hasty eating 
and adulterated foods, arraying the quick-lunch patrons 



502 THE COST OF COMPETITION 

along the counter; and the horses with their nose-bags 
along the curbstone; which cherishes alcoholism and dese- 
crates our privacy by means of patent " medicines " and 
their advertisements; which keeps the peripatetic book- 
agent in circulation and hand-bills our doors; which 
denudes our forests and ruins our climate ; which puts our 
outward aspect, between the natural beauty of savagery 
and the cultivated beauty of true civilization, in the posi- 
tion of Kipling's raw recruit, who " had lost his gutter- 
devil and hadn't found his pride." It is barter, ever 
present in spirit as well as in deed, which has driven away 
from us, as a nation, all patience with the art that is longer 
than life; which declares all painting worthless which does 
not catch the eye with novelty of style and every note 
dull which is not played tremulo; which dictates for us our 
long hours and concentrated form of work and the hurry 
of our recreations, poisoning our every indoor moment 
with comparisons of worth and our every out-door breath 
with comparisons of speed; which forces us all to choose 
between being irritable critics or wearied cynics; which 
makes nervous breakdown our national disease and spreads 
over the land a network of well-filled sanitariums; which 
forces us, at every turn of our over-intricate life, to choose 
the strenuous while preferring the simple; which, and not 
democracy, has robbed us of the stately courtesy of older 
and unsold days, when men had time to live; which 
casts over every line of the divine picture of true success in 
life, of life properly one glad sweet natural song, a tinsel 
curtain whose woof is external ostentation and whose warp 
is concealed antagonism. For such is the philosophy and 
the fact of barter, when legalized, operated and wor- 
shiped upon a national scale. 



VI 
CAPITALISM AND LABOR 

" We impute deep-laid, far sighted plans to Caesar and 
Napoleon ; but the best of their power was in nature, not 
in them." — Emerson. 

" In my present position I could scarcely be justified 
were I to omit raising a warning voice against this 
approach of returning despotism. It is not needed 
or fitting here that a general argument should be made 
in favor of popular institutions; but there is one point, 
with its connections, not so hackneyed as most others, to 
which I ask a brief attention. It is the effort to place 
capital on an equal footing with, if not above, labor, in 
the structure of government. It is assumed that labor is 
available only in connection with capital; that nobody 
labors unless somebody else, owning capital, somehow by 
the use of it induces him to labor. 

" Labor is prior to, and independent of, capital. 
Capital is only the fruit of labor, and could never have 
existed if labor had not first existed. Labor is the 
superior of capital, and deserves much the higher con- 
sideration." — Abraham Lincoln, December 3, 1861. 

IN considering the ethical aspects of the relations be- 
tween capitalism and labor three fundamental facts, 
amounting to principles, must be kept carefully to 
the fore, viz. : 

(i) That the pressure upon the individuals involved 
upon either side, but particularly upon the labor side, 
comes not from the individuals on the opposing side, hut 
from the nation* s general burden of barter; 

503 



504 THE COST OF COMPETITION 

(2) That it Is enforced by law and public opinion, and 
Is avoidable by either side only to an Insignificant 
degree; 

(3) That It always and Inevitably starts with labor In 
a position Inferior to and dependent upon capitalism. 

When a difference of opinion as to wages, hours of 
labor, etc., arises between an employer and his men, those 
directly party to It cannot be expected to see It otherwise 
than as a purely personal and local question. Any Inter- 
ested onlookers who may take sides with either party are 
naturally prone to do the same. With those at a greater 
distance, however, with the students of sociology, the 
editorial press, the legislators and the arbitrators, such an 
attitude Is not permissible. There should be no difficulty 
on their part In forgetting the personal aspect of the case 
and In recalling the true breadth and depth of the situa- 
tion. 

Indeed, of such vital Importance to the entire com- 
munity Is justice of attitude toward this tremendous ques- 
tion that It may be urged that no man possesses the right 
to speak publicly upon It until he has mastered the fact 
and the spirit of these three fundamental principles. 
They are always operative and effective, and must always 
constitute the starting-point for any consideration of the 
case. 

The principle first stated Is the most important. It 
may be true that avarice or tyranny, or their opposites, 
might still animate any given set of employers or labor- 
ers, and cause friction, were both free from all irritations 
extraneous to the local question between them; human 
nature is to be expected to be imperfect under the best of 
conditions. But even so. Its magnitude compared with 
the present Intensity of combat would be insignificant. 
For the friction arising may be safely assumed to be pro- 



CAPITALISM AND LABOR 505 

portlonate to the sum involved In question. Now the 
Increase In purchasing-power for which, or the decrease 
against which, any strike Is commonly Inaugurated sel- 
dom exceeds ten per cent, of the prevailing rate of Income. 
It Is usually much less, In reality. This Is, therefore, the 
total amount by which the situation of the laborer could 
be ameliorated by a complete cessation of all bargaining 
upon the employer's part, or vice versa. But the trouble 
with the laborer Is not that his purchasing-power has been 
depressed ten per cent, below his productivity by his 
employer's refusal to give him that ten per cent. The 
trouble is that his purchasing-power is currently de- 
pressed below his productivity, until it amounts to only 
thirty per cent, of it, by the efforts of every man in the 
country who is engaged in influencing prices or market; 
It Is because the cost of the entire volume of barter 
throughout the land Is charged against and deducted from 
his productivity, to the deterloraton of his purchasing- 
power. It Is against the unconscious antagonism of this 
myriad of utter strangers that his endurance Is pitted, 
not against his single visible antagonist, his employer. It 
is because the harm which is done his purchasing-power 
by this army of outsiders is at least from ten to twenty 
times as great as is that involved in his relations with his 
employer, seventy per cent, compared with a paltry three, 
that the situation is hopeless of peace. In other words, 
his average wage amounts to but thirty per cent, of his 
productivity. Feeling its Insufficiency, he strikes for a 
ten-per-cent. " raise," to thirty-three per cent, of his pro- 
ductivity, or In protest against an equal " cut," to twenty- 
seven per cent, of his productivity. But before the dis- 
crepancy between his productivity and his purchasing- 
power, and hence the discontent in the situation, can be 
wiped out, his wages must be Increased by some sixty or 



5o6 THE COST OF COMPETITION 

seventy per cent, of his productivity, or by some twenty 
times what he is striking for. And usually a ten-per-cent. 
raise or cut is all that is involved in dispute. Therefore, 
the utmost avarice on the part of the employer can aggra- 
vate, his utmost generosity can ameliorate, the loss which 
causes all the friction between capitalist and laborer by not 
more than one-twentieth. That is why, in a nut-shell, the 
most liberal of employers still have strikes, while the 
meanest of them are still able to retain a laboring force 
about them. 

No words can properly emphasize the essentiality of a 
grasp of this truth to a fair understanding of the situa- 
tion and its ethics. The attitude of the laborer is most 
naturally that of one robbed of seventy per cent, of his 
just dues. He could not state it in figures; he could not 
explain the forces at work to produce it. But he feels 
it, in his daily life, with a moral certainty which, when 
integrated throughout the millions, throws labor's atti- 
tude into the light of the most wonderful patience and 
moderation rather than of the hasty avarice and tyranny 
which is commonly ascribed to it by the superficial 
observer. 

The employer, on his part. Is not conscious of having 
inflicted any such heinous wrong as the robbery of seventy 
per cent., if indeed he be conscious of having inflicted 
any robbery at all. He is not only not taking a seventy 
per cent, which can be visibly, definitely computed as 
deducted from the laborer's net productivity, but not even 
the ten per cent, which is admittedly under dispute may 
be classed, to his opinion, as such. There is no known 
system of consistent economics by which, under the pres- 
ent plan, the net productivity of the laborer can be cal- 
culated and from which, as a basis, the laborer can be 
said to be getting too much or too little. It is an accepted 



CAPITALISM AND LABOR 507 

idea that labor, as well as the market, is to barter for its 
price and to get as much as it can. The fact that the same 
minds at the same time hold the quite incompatible idea 
of there being a naturally " fair wage " does not dis- 
prove the proposition. The same people commonly 
speak, in successive moments, of the *' fair wage " and 
of the divine right of every man to " get his price," 
meaning all that he can get, just as if the two ideas were 
not hopelessly inconsistent. The law, for instance, 
declares that there is such a thing as a " fair " cab-hire, 
and therefore makes it an offense for the cabman to bar- 
gain for more. The law does not hold, on the other hand, 
that bargaining for the best wage-rate obtainable in other 
lines is an offense ; and it has therefore consistently refused 
for years to recognize any such thing as a " fair " 
minimum wage for general classes of labor. So far it 
has been consistent. The inconsistency of its attitude 
toward cab-fares and postage-stamps, on the one hand, 
and toward the prices of all other sorts of labor on the 
other, it has never attempted to explain. 

The attitude of the laborer Is very naturally one of 
grievance, therefore, and that of any just-minded person 
in the same situation would be the same. The attitude 
of the employer, likewise, is very naturally one of con- 
scious rectitude, and such would be that of any just per- 
son in his situation. The obvious inconsistency between 
the two Is not to be reconciled or understood, by the most 
thorough of observers, except by the light of the fore- 
going analysis of the cost of competition. Until this be 
grasped by the majority of the people and the source of 
all the irritation removed by their conjugate action, 
laborer and employer cannot possibly cease their bitter 
strife. No amount of generosity on either side, no amount 
of fair-minded arbitration from without, may possibly 



5o8 THE COST OF COMPETITION 

be expected to more than slightly ameliorate the friction, 
— to veil the sparks and conceal the heat, as water does 
on grinding bearings, without accomplishing effective 
lubrication. 

But such an ideal condition of extreme generosity on 
either side, or of a perfection of arbitration from a dis- 
interested (and therefore unconversant) audience, can 
never be practicably hoped for. The second principle 
stated at the opening of the chapter must ever be active. 
Given: the agreement between all parties, those without 
as well as those within the action in any case, that the only 
way to settle upon the proper figure of average wage for 
any sort and amount of labor, under any given condi- 
tions, is by barter, is by a trial of strength between those 
awarding and those receiving the wage, — given these 
premises and the law of equilibrium ensures that between 
the two parties must currently occur that maximum 
amount and cost of contest, in the shape of strikes, boy- 
cotts and lock-outs, which the two can bear without pre- 
ferably ceasing contact altogether. 

That the premises are actual hardly needs argument. 
There is no more rigid unwritten law in the land, at 
present, than that the average wage is to be settled only 
by barter. If it were only recognized that there is such a 
thing as a naturally correct wage, although it would still 
leave open the great question as to how to determine what 
it is in any case, there would yet be hope of peace. But 
the very privilege of holding aloof from any reference 
of the wage-question to natural law, even when it is sus- 
pected to exist, the freedom to refer its settlement to 
individual contest of individual might, is regarded as one 
of our fundamental political rights, to be defended as a 
sacred thing. Even the substitution of compulsory ar- 
bitration, equivalent to trial by jury, for the duello 



CAPITALISM AND LABOR 5<^9 

called competition, Is so widely resented as to be imprac- 
ticable, — as it must naturally prove to be from other 
reasons. 

This process of settlement by duello being funda- 
mentally In the premises, it follows that the process called 
" charging all the traffic will bear " must apply just as 
relentlessly against the employer In his competition with 
labor as It does against the consumer in his competition 
with the employer or the capitalist. It is axiomatlcally 
Inevitable that each party to such enforced strife should 
push his contention to the point where further gain there- 
from will be counterbalanced and absorbed by the cost of 
contention Incidental thereto. 

But at the other extreme, — supposing existing peace 
between labor and employer, the negotiations not yet 
begun, but with the wage-question open for settlement by 
barter, — this net gain would be very far from zero. The 
fight once declared on, any slight activity of offense, from 
either side, will always bring in a return great in propor- 
tion to the cost. Therefore, the profitableness not only 
of resistance, but of aggressiveness, will quickly become 
obvious to all parties. Some considerable exertion of it is 
Inevitable. 

Indeed, this can be proven by reductio ad ahsurdum. 
For let It be supposed that either side fails to contest the 
ground. If that side be labor, the pressure from above 
will quickly reduce It to that degree of depression that 
the resultant brutallzatlon (see page 419) has been 
sufficient to make It resist and combat. If that side be 
the employer, then will the pressure from below quickly 
elevate wages to such a point that the peace-loving em- 
ployer can no longer compete with his less conscientious 
and more combative neighbors; and the effect of avarice 
upon human nature will always ensure that there are some 



510 THE COST OF COMPETITION 

such. Either the matter will pass Into the latter's hands, 
to the extinction of the former, or the original employer, 
brutalized by the same excess of pressure and worry which 
was before Imagined as applied to peace-loving labor, will 
alter from neutral to combative. Hence, combat will 
ensue. — Q. E. D.^ 

The forces thus pictured in extreme, .to prove the 
necessary existence of combat, also prove that its average 
Intensity will be determined, as stated above, by each side 
suffering the maximum cost of contention: by labor's 
undergoing the minimum starvation-wage and the 
maximum proportion of unemployed time, by the cap- 
italist's endurance of the maximum disturbance by strikes, 
lock-outs, union-tyranny, etc., which will permit him to 
remain, on the average, profitably in business. The law 
of fluid equilibrium in economic activities declares that 
this Intensity of combat accompanying a given volume of 
labor cannot depart far from the aggregate proportion 
of barter to production in the entire industry or the entire 
community. In any individual case the departure of 
intensity of combat from the average .will be determined, 
of course, by local conditions. But such departure will 
always be small. Here and there some concern will be 
found enjoying almost perpetual peace. Occasionally 
will be found others which seem to be always in hot 
water. Neither are frequent. Absolute peace is, I 
believe, quite unknown. 

The detailed fact which determines this relation is the 
fluidity of labor In Its transfer between one industry, or 
one employer, and another. There are, of course, resist- 

1 This demonstration is respectfully dedicated to those who revere both 
their Euclid and the competitive wage-system ; who call for peace between 
labor and the capitalist, where there is, and can be, no peace. The class is 
by no means either small or mediocre, and the reader may feel no shame 
in finding himself in it and, with it, in the wrong. 



CAPITALISM AND LABOR 511 

ances; the fluid is viscous. In skilled labor trades cannot 
be disregarded. Even in unskilled labor the removal of 
the household is a serious obstacle to the free search for 
the betterment of employment, — a factor which was 
made good use of by the employers in the famous Home- 
stead strike. But in general it may be accepted that labor 
flows naturally to the point of best wages or pleasantest 
work. Hence the rate of wages for a given grade of 
exertion is practically fixed over large areas of country. 
The thing which fixes it is the starvation-wage, depend- 
ing upon the accepted minimum standards of life. The 
reason why wages are higher here than in Europe is 
because the American laborer will not tolerate the grade 
of life which the European will accept. In this sense, 
and this only, does our higher standard of education raise 
wages. The higher average individual productivity in 
America, affording a larger aggregate volume of wealth 
for distribution, is an effect, and not a cause, of the higher 
wage. Native American labor is racially more effective 
than European; but the fruit of its eflUciency is not greater 
wages, but more barter, than elsewhere. (See page 
257.) For the primary characteristic of economic Dissi- 
pation : that it tends to grow indefinitely, absolutely with- 
out limit, ensures that, however great may be the avail- 
able volume of wealth distributed, economic dissipation 
will absorb of it all which is not necessarily left over for 
labor to persuade it into continuance of production. 
It would absorb still more, reducing American labor to 
the level of European, were it not for our higher stand- 
ards of individual freedom and comfort, born of the 
virgin continent and cherished by our every tradition of 
patriotism and liberty, leading to stouter resistance to its 
encroaching demands. It is this resistance alone, 
organized into systematic expression by the trades-union 



512 THE COST OF COMPETITION 

and the strike, as tyrannical as was the colonial army of 
independence, which keeps wages up. It is the scab and 
the strike-breaker, aided by the man who urges upon labor 
lower standards of living, which alone keeps them down. 

Therefore, when any employer finds himself in contest 
with his employees, let him remember that he is face to 
face, not with a paltry handful of men, or a few hundred, 
or a few thousand, but with the seried ranks of the whole 
deep-chested class of American workmen, twenty-five mil- 
lions in number, — the class which makes Theodore Roose- 
velt " proud to be an American." He cannot depress 
wages, or lengthen hours, or exact conditions from the 
skirmish-line with which he is in parley, except he can 
enforce them against the entire body of the army. 

The same is true of the employees: they cannot per- 
manently secure better wages or shorter hours or greater 
freedom except they make themselves effective against 
the entire class of employers, by national harmony of 
action. 

But beyond this, and much more important, is the fact 
that both of these great bodies of citizens are coerced by 
the presence of the tyrannous institution of barter, a devil 
unconsciously harbored. The employer, as he hears the 
muttering of discontent, is threatened by a broad and 
inevitable consequence of the reduction of the purchasing- 
power of the millions by the costly presence of his and his 
colleagues' dissipative competition. It is not his own an- 
tagonism, visibly directed against his employees, which 
irritates them; it is that directed against his commercial 
competitors and his consumers, lumped with its parallels 
all over the land, which robs them of their independence, 
of two-thirds of their rightful purchasing-power, and con- 
stitutes the true source of their discontent. He is not deal- 
ing with individual men, nor with individual passions, nor 



CAPITALISM AND LABOR 513 

with theories; he is in negotiation against a soulless, 
unfeeling, all-absorbing instituted fact, enforced, in uncon- 
scious unity of action, by seventy millions of people, by 
the national maintenance of commercial competition; 
administered by activities like his own, contentious and 
grasping, but of which his own are but a microscopic 
part; the fruit more of his efforts against his peers, his 
competitors and his consumers, than of his efforts against 
his employees. He need not be irritated by the actions 
of his men; they are but expressing the inevitable biolog- 
ical reaction against the presence of this evil. He need 
not hope to prevail against them, except as he may 
ameliorate the condition of all labor by the restriction 
of all free competition, horizontal as well as vertical. 

The men, on their side, need also to see his helplessness 
to better matters. While the employers are the individ- 
uals who happen personally to conduct and oversee bar- 
ter, and are therefore more guilty than are the public, 
yet they are responsible chiefly as a unit-body and as 
Individuals only as the guides and models of American 
public policy. Obvious individual avarice may always be 
publicly condemned and resented to advantage; but the 
avarice of the individual would be impotent to harm were 
it not backed by the united avarice of the country, 
organized into the legal support of barter. 

These, then, are the first lessons to the average citizen 
who condemns strikes : 

( 1 ) That the settlement of wages by barter, which he 
supports, makes inevitable a certain intensity of barter in 
the form of strikes, etc. 

(2) That, however much the community of laborers 
may lose in any one instance by striking, in wages lost, 
the general rate of wages for the entire laboring class is 
always higher as the proportion of strikes increases. 



514 THE COST OF COMPETITION 

Already at the starvation-level for a certain portion of 
the community, and below It for another, the average 
wage would be less, the proportion of bargaining to pro- 
ductive effort In the community would be greater, and. In 
consequence, all of the social Ills listed In this volume 
would be greater, were It not for the strike. Therefore 
the striking workman Is unquestionably a public bene- 
factor. He stands as did the Boston Tea Party, In the 
attitude of earnest protest. The significance of his Imme- 
diate action may have as little relevance to the radical 
question at Issue as did theirs. He may get as little credit 
for sense or patriotism as they would have gotten had the 
War of Independence failed and we still continued subjects 
of England's king. He at least calls lazy public at- 
tention to the fact that something Is wrong. By his 
courageous. If blind, stand he does what courage al- 
ways does: keeps matters from being worse than they 
otherwise would be. Wasteful and Inefficient as It may 
be, as all revolt must be, the strike Is the only means, out- 
side the ballot, which we have left In the hands of the 
wage-earner for maintaining his income. Increased dili- 
gence or skill will not affect the average wage one Iota. 
And as for the ballot, it is the capitalist alone who has 
undermined its efficiency, by his corruption of our public 
offices and his purchase of votes, until he has driven labor 
from ballot to strike, until it has now become a fact that 
our best reliance for the purification of the ballot lies in a 
reform of our economic institutions, rather than the ballot 
Itself being an effective means for the purification of our 
politics. 

(3) That the' total cost of such strikes is determined, 
not by the vindlctlveness of the contending parties at all, 
but by the proportion of barter to production in the land. 
To the great majority of the readers of these pages Ft 



CAPITALISM AND LABOR 515 

may be said that they are individually, in the prosecution 
of their daily business, doing all in their power to increase 
this proportion. 

(4) That arbitration is utterly futile as a solution. 
Voluntary arbitration serves the same purpose as an 
armistice in war: gains time for sober second thought or 
for more thorough armament. In neither case can it per- 
manently affect the bitterness of combat, because it neither 
touches nor remedies the original cause of combat. 
Besides, it is an attempt to arbitrarily invade the natural 
law stated in paragraph 2 ; neither side is going^ to agree 
to arbitration so long as it feels that greater gain can be 
made for its own side by the fortunes of war. 

Compulsory arbitration is too unnatural and incon- 
sistent a compromise to ever serve even a temporary 
purpose. It constitutes a complete reversion from demo- 
cracy to despotism. 

Taking, then, the strike as an inevitable institution, 
the normal relation between the laborer and the capitalist 
is one of war. Because this statement may even now 
appear to be extreme and untrue it is to be supported by 
the following, needing no qualification : That even where 
the relations between the capitalist and the laborer are 
apparently perfectly amicable, inherent antagonism of 
interests exists; for antagonism of lahor^s interests, by the 
extraction of interest and dividends, is the sole object of 
the existence of capitalism. No man would care to own 
capital (as distinguished from money) were he not per- 
mitted to draw interest upon it, and all of the interest 
which he can force labor to give up to him, too. 

Between workman and workman there is always 
naturally harmony and cooperation. Between labor and 
the capital itself, the inanimate tools which he uses, is the 



5i6 THE COST OF COMPETITION 

same. So is there between labor and the consumer. 
These naturally harmonious relations are occasionally 
broken, of course, by individual contentiousness or by 
misunderstanding. But the natural relation is one of 
harmony. 

Between labor and the capitalist, however, the antago- 
nism is natural and inevitable, from the very nature of 
capitalism. This antagonism must not only naturally 
continue to exist so long as capitalism exists, but it is 
desirable that it should. It is as natural and as whole- 
some as was the antagonism between the colonists and the 
British soldiery in 1775. It would be equally a catas- 
trophe for the country, in either case, if it should supinely 
cease. All hope for the removal of the evil would then 
be gone. 

To rightly understand the problem before us, and our 
words about it, there must again be brought prominently 
to mind the wholesale distinction between capital and 
capitalism. The capital which labor needs for its daily 
task is that of machines, tools, buildings, etc. With these 
it must always be in the closest and most harmonious con- 
tact possible, — properly much more so than is now the 
case. But of the capitalist it makes no use whatever, 
nor of his capitalism. The " capital " which the capitalist 
recognizes as such, and which the public commonly refers 
to as being such a boon to labor, the stocks and bonds and 
similar paper securities, the mere legal control of capital, 
is not capital at all, but capitalism. It is this legal control 
for the purpose of imposing the tax called interest which 
alone brings the capitalist into contact with labor as its 
" employer " and with the consumer as its " purveyor." 
But the consumer is the sole employer; labor is the sole 
purveyor. Capitalism has nothing to do with either, 
except interference. It is not because Mr. J. P. Morgan 



CAPITALISM AND LABOR 517 

is fond of navigation or takes pride in increasing his 
community's welfare on the high seas that there Is a 
steamship *' trust." There is not a sea-captain afloat suffi- 
ciently skilled or enthusiastic In his profession to step 
thereby into Mr. Morgan's shoes; the best of them, held 
responsible for thousands of souls and millions of dollars 
each trip, ready to give up their lives for the service which 
they rightly perceive to be a public trust, get $3000 per 
annum. The ^' trust " exists because ocean-transportation 
was at that particular time open to legal control and con- 
solidation by Individual initiative for no other purpose 
than private profit. It is not because Mr. Rockefeller 
" just loves " petroleum that he has amassed the Standard 
Oil interests. It is because the law encourages these and 
all gentlemen to sit In their offices, with paper securities 
in their hands, never seeing a steamship or an oil-tank, 
and to wage economic war, by wire and by mail, against 
their competitors, their labor and their consumers, con- 
trolling the price of their own for each, that there are 
such things as trusts. To confuse the Idea of " capital " 
as these men know It, of mere paper securities and lawyer's 
processes, with that of " capital " as the laborer knows it, 
with the tools with which the world's work is done and 
which he wields in doing It, would be childishly absurd 
were it not so cruel. 

Between labor and the capitalists who pretend to be Its 
employers, therefore. Is naturally and inevitably war, of 
a certain degree of intensity. For war, complete enroll- 
ment and organization and the most thorough discipline 
are absolutely necessary. For the first, volunteer action 
failing, the draft has been relied upon and excused in 
all lands and at all times. The persecution of non-union 
workmen and strike-breakers is simply this ; nothing more. 
The labor-unions have been forced, by the intensity of 



5i8 THE COST OF COMPETITION 

vertical competition with capitalism, to eliminate hori- 
zontal competition between themselves of a suicidal sort, 
to quell dissension within the ranks, to adopt drastic 
union. In order to avoid slavery they compel union. In 
1861 we did the same, even to the extent of ample blood- 
shed, raising monuments since to those who volunteered 
their aid in the compulsion, offering scorn and the draft 
to those who held back In the name of the freedom of 
the individual will. Between the scab and the copperhead 
the difference is Insignificant. Strange that we should now 
regard the same processes and attitudes in so altered a 
light! Is there not need for more deliberate reflection 
before condemnation of the union workmen for the 
violent coercion of those who belong, by nature or by 
choice, to the class which is struggling for its existence 
and its rights and who yet will not join In its defense? 
Is there not need of reflection upon the days when the 
question of union or no union was last before the people 
of this Republic as a national Issue? 

If the laborer who refuses to enlist in the defense of 
his class-rights is false to his duty to his own especial com- 
munity, so Is the capitalist false to the interests of capi- 
talism who refuses to contest matters with labor. There 
is not sufliclent evidence to say, broadly, that all generosity 
to labor from its employers has led to an increase of 
strikes; but there is, on the other hand, a strong prob- 
ability, with not the slightest evidence to the contrary. 
The current instances of the most liberal treatment of 
operatives, such as at the works of the National Cash 
Register Company, of Dayton, Ohio, contribute to his- 
tory their quota of strikes. The strike is evidence of dis- 
content: sometimes mistaken, usually wholesome. Noth- 
ing will engender discontent like charity: things given, 
presented, more or less condescendingly, with the control 



CAPITALISM AND LABOR 519 

always retained In the other's hands, although already 
owned by the recipient by right. 

Moreover, the capitalist class may win by strikes. The 
Individual employer attacked of course does not usually 
win, but his class does. The capitalist lives upon the 
principle of dog eat dog; he who has given his strength 
and time to fighting labor nearly always finds, when he 
has finished, that his competitors have taken advantage 
of his preoccupation to strengthen their own position, if 
not to actually " slit him up the back." ^ 

But very often even the capitalist attacked wins 
thereby. The strike so enhances prices that he himself 
wins greater profits by suspending production temporarily 
and selling off his accumulated stock. But in this case 
he arouses, slowly but steadily, the only enemy of whom, 
because unorganized, he has now no fear but who alone 
really holds danger for him : the consumer. 

Herein -lies the final proof that the relations between 
labor and capitalism are necessarily those of irreconcil- 
able war, that the contest is one to be terminated not by 
capitulation or compromise from either side, — that has 
been tried repeatedly, — but by extermination, not of indi- 
viduals, but of institutions, of capitalism. There is no 
solvable Issue between capitalism and labor, to be settled 
finally by arbitration or by other means. The Issue is one 
between war and peace. It Is solvable only by the sur- 
vival of peace over war, and this survival Is to be decided 
only by the sole rightful sovereign of the industrial world: 
the consumer. It is he who employs both employer and 
employee; it Is his money which pays all wages and all 
dividends; it is he alone who can end the guerrilla warfare 
between capitalism and labor, as summarily as any super- 
intendent would quell a free fight over the machine-tools 

2 The terms win and lose are used here in a comparative, not an 
absolute, sense. The community as a whole always loses by strikes. 



520 THE COST OF COMPETITION 

in his own shop. As surely as history repeats itself most 
of us now living shall see ourselves, every one of us, 
consumers all, drafted by constitutional law into indis- 
soluble union with these same trades-unionists and capital- 
ists, millionaires, walking-delegates and tramps, into an 
organization coincident with the limits of American citi- 
zenship, for the primary purpose of abolishing, in law 
and in fact, that civil strife which may all be included 
under the name of barter. 

That the demand for this abolition is already upon us, 
voiced in no uncertain tone, from a million different 
throats, in a thousand different ways, confusedly, seeing 
but dimly the proper substitute or the ways and means, 
seeing all too keenly the vital need for one, it were well 
for the prudent now to recognize. The demand is unan- 
swerable. Homoeopathic remedies, curing competition 
with competition; temporary stimulants, in the way of 
tariffs and subsidies; vain compromises with evil, of gov- 
ernmental commissions or public control: — compare the 
utmost which they may hope to accomplish with the mag- 
nitude, the power, the ubiquity, the supremacy of barter! 
They avail but to delay the issue, aggravating it mean- 
while. They in no wise aid, they fearfully hinder, its 
settlement. It is neither the disease nor the cure which is 
going to be the most expensive to the community; it is 
the present cowardly delay in sober diagnosis and in 
prompt attack. 

That is all there really is to the ethics of employer vs, 
employee. That each should wage his war broad-mindedly 
is of course desirable. But whether one or the other be 
wrong in any particular case matters nothing at all, in 
the long run. These battles between capitalism and labor 
are exactly like the wars of the Middle Ages: intermin- 
able, indecisive, accomplishing apparently nothing at all; 



CAPITALISM AND LABOR 521 

accomplishing really the all-important: the elimination of 
the idea that the interests of a minority are to take pre- 
cedence over those of the country as a whole, or that 
fighting over them at all furthers matters. In past his- 
tory when that was done, when England had become Eng- 
land and France France, then came the renaissance. 
Only when a certain degree of political unity had been 
attained could individuality arise. Then the known world 
opened, in a century, to twenty times its previous expanse, 
geographically and metaphorically. So shall it be In this 
second renaissance, now almost upon us, when it is finally 
discovered that fighting over private profit does not pay; 
when the consumers find that the nation is a unit, after all, 
not to be distracted by schism into factions with opposing 
pecuniary Interests, and that they are it. Things happen 
more quickly now than they did then; a decade of the 
second renaissance will enlarge our vision more than did 
a century of the first. 

So it matters nothing at all how employer regards 
employee, or vice versa. But It matters everything in the 
world, for the fate of the nation hangs thereon, how the 
consumer looks on and regards this fight over his bus- 
iness with his money. The capitalist, for one, has no 
right to sympathy. He is fighting for life, to be sure, 
but for a life of luxury and in a fight purely of his own 
making. Men of his class, which nullifies the effective- 
ness of the ballot by campaign-contributions, by the reten- 
tion of a lobby or of " influence," or by bribery, can find 
little ground for complaint when the oppressed turn from 
the ballot to the strike, to the boycott or to revolt for 
relief. So award the sympathy, if sympathize you must, 
to the men who are fighting for life itself, in a fight not 
of their own making. But place your judgment and your 
ballot against the entire fighting plan, against all barter 
as a legalized national institution. 



VII 
FUTURE PROGRESS WITHOUT POVERTY 

HITHERTO these pages have been devoted to the 
analysis of existing facts. It has been no pur- 
pose of this book dogmatically to predict future 
evolution, except as It may become obvious from a study of 
the forces which are at present molding society into what 
we find It to be. 

This attitude Is necessary primarily because one of the 
fundamental popular errors In regard to social evolution 
is that it exists only as a result of previous individual evolu- 
tion, and therefore, that any attempt at Its furtherance by 
deliberate alteration of social institutions Is either futile, 
If unaccompanied .or preceded by such Individual develop- 
ment, or Is unnecessary If so accompanied; In short, as Is 
frequently asserted, that " you cannot legislate people 
good." 

If the reader of the preceding analysis has perceived J 
aught of general sociological principle between the lines, — 
or in them, for that matter, for there has been no desire 
to conceal, — he has perceived long ere now that the book 
stands for the directly opposite view from this: that it 
both rests upon and supports the general evolutionary law 
that each form of life is created by, not creative of, Its 
environment; although the reaction from Its growth may 
subsequently affect Its molding environment. Hence, 
there is no hope of altering human individuals until you 

522 



FUTURE PROGRESS WITHOUT POVERTY 523 

first alter man's most active environment: the artificial 
institutions, customs and laws through which he is related 
to other men, which he himself has created and which he 
alone can modify or destroy. 

For instance, it is commonly said of the plan for equally 
dividing all wealth between all individuals (which no sane 
person has ever proposed) , and in proof of the power of 
individual greed over the distribution of wealth, that the 
result of human nature in contact with such premises would 
be to regain promptly the present inequality of distribu- 
tion. That is true, if existing institutions, including bar- 
ter, were to remain unchanged. But, what is more impor- 
tant, that statement can be rigidly paralleled by this one, 
also true, because the dependency of individual physiog- 
nomy upon environment is complete: If all the individ- 
uals of the world were suddenly transformed into perfect 
angels, yet still subject to worldly organic law, and pro- 
vided that their angelic dispositions found no expression 
in the alteration of existing institutions, inside of one or 
two generations the distribution of individual morality and 
intelligence would be just what it is to-day. 

It is no strange statement in evolutionary law that a 
form of life too highly developed to harmonize with its 
environment will degenerate into equilibrium with it, or 
else become extinct; as easily, and more so, than a form of 
life too low for its environment will develop to or be sur- 
vived by one more highly fit. Equilibrium is attained by 
degeneration down to fitness to survive when the environ- 
ment is more primitive than the existing life, just as much 
as it is by growth upwards into fitness to survive when the 
environment is more advanced than the existing life. 
Indeed, the former is the easier process. 

At present the institutional environment of civilized 
existence is far more primitive and rudimentary than is the 



524 THE COST OF COMPETITION 

life which springs up amidst it and degenerates down to it 
or dies. Our institutional environment consists of a mixture 
of Phoenician commerce, Roman law and medieval feudal- 
ism. Not a single portion is modern, no part has been 
deliberately designed by the intelligence to accomplish its 
purpose, except our plan of political representation; and 
the outlet which this last has offered for growth in one 
direction for over a century is just what has made so pain- 
fully evident to our sensibilities our Incarceration in other 
directions. 

Such a degeneration as that just supposed to take place 
In a world-population of angels would consist of nothing 
more than being " legislated bad." Our imperfect human 
statutes and the unnatural relationships which they enforce 
would throw too many economic obstacles In the way of 
the survival of the true angels and would offer too favor- 
able a chance of survival to the sporadic degenerates 
exhibiting traces of selfishness; for to the most selfish these 
statutes allot the maximum material prosperity. This 
process of legislating people poor and bad is so extremely 
active to-day that this book has been devoted to an esti- 
mate of the extent of current human want, wickedness and 
sorrow for which it is responsible. Therefore It is axio- 
matic to place in the premises of our economic synthesis the 
statement that just so far as we found that any institu- 
tion, such as barter, legislates people poor, its reversal or 
abolition will legislate them into competence and comfort. 
Our ethical synthesis will be built upon the similar moral 
that just so far as barter artificially Induces people to be 
wicked, its abolition by law will truly " legislate them 
good." 

No skeptical worshiper of the supremacy of the Indi- 
vidual soul need reject this proposition. The supreme 
soul is subject on earth to limitation by earthly surround- 



FUTURE PROGRESS WITHOUT POVERTY 525 

ings. This " legislating it good " is not forcing it to be 
good; it is merely permitting it to be good, to grow into 
goodness, by forcibly preventing the wicked from slaying 
its body, — whereupon it proves its divine origin by grow- 
ing better and better on earth instead of in heaven. No 
agnostic worshiper of Natural Law need reject it either. 
It merely urges the modification of our now faulty statutes 
into coincidence with the natural law of all human, as 
well as all inanimate, relations : mutual gravitation into 
cooperation and unity of method. 

In short, it is plain that if these antagonistic and de- 
structive institutions of ours can be abolished, if the natural 
human gravitation toward cooperation and specialization 
can be freed, if conditions can be maintained which will 
ensure the operation of the Law of Increasing Returns, 
the supply of the necessaries of life will increase mor^ 
rapidly than the population; the race will prosper and 
progress in geometric ratio as it multiplies. This Is quite 
in accord with natural law and with human hopes. The 
Creator shows plainly, in a thousand ways, that man was 
not placed upon earth to enjoy idle ease and freedom from 
pain. He has shown just as plainly, and has implanted at 
the very bottom of the human heart the recognition of the 
fact, in the form of a hope that never dies, that man is not 
here condemned to a struggle with the elements so futile 
that with the physical comfort which he seeks in vain is 
also lost that faith in man and God which alone can melt 
pain away into paradise. What bodily pain we feel may 
come from either man or God; but the torture of the soul 
which far surpasses that, the sting of malice, of Injustice 
or of Ingratitude, the bitterness of Gethsemane, comes 
alone from the cruelty of man to man. 

This ignorant Injustice, In our economic studies, distills 
down to a residue of rigid formulae. It Is when these con- 



526 THE COST OF COMPETITION 

ditions which ensure the operation of the Law of Increas- 
ing Returns are neglected, it is only when antagonism is 
artificially forced upon the masses, in pure ignorance or 
in unenlightened selfishness, that the growths of popula- 
tion, prosperity and civilization alike are stunted. Then 
does the " surplus population," grim jest upon the deficit 
in population, upon the unborn increase which should have 
been but could not be, make itself known, — the skeleton 
guest at the nation's wedding-feast. " War, pestilence and 
famine " offer their heroic remedies, prescribed in the 
name of innocent Malthus. Crime, insanity and suicide, 
the modern representatives of this famed family of execu- 
tioners, set feverishly to work, under the inspiration of 
their ancestors, to clean the Augean stables of the race of 
this quivering surplusage of human refuse, — which enters 
and accumulates by the barter-window faster than it can 
be heaved out at the door by the most strenuous exertions 
at production, at charity or at extermination. 

These conditions essential to increasing, or even con- 
tinued, prosperity are: — 

( 1 ) Specialization, so far as productive Industry is 
concerned, to the last degree ; 

(2) Coordination the same. 

For complete specialization are needed: 

(a) Diversity and interdependence of the departments 
of industry ; 

(b) Ideal opportunity for education and invention; 

(c) Complete political and personal liberty; 

(d) Perfect return to the individual of the value which 
he produces. 

For perfect coordination is needed: 

(e-z) Complete unity of material interests. 

Of diversity and interdependence of the departments of 



FUTURE PROGRESS WITHOUT POVERTY 527 

industry we now have more than we have of any of the 
others. Their furtherance is the work of applied science 
and invention. Each step in that work multiplies the 
instances in which the by-product of one industry be- 
comes the raw material of another, so that enterprises 
which were before totally independent and uncommuni- 
cative are now forced into some form or other of cooper- 
ation. 

Of opportunity for education and invention we have a 
fair amount. All that generosity and scientific interest on 
the part of the wealthy can do is being done. But very 
much more than that is needed: the more liberal main- 
tenance of the students themselves; and that the generous 
cannot give without pauperizing them, which is worse 
for them than the lack of education. 

Of political and personal liberty we have yet even more. 
We have not so much as we think we have, but we have 
nearly enough for present purposes. With the advent of 
the initiative and referendum, and of minority-representa- 
tion, little more can be asked for. 

It is when the next class of needs is taken up that the 
lack appears. Although of coordination we have a great 
deal, of unity of interests we have almost none. Every 
bit of factory-organization throughout the land consists of 
the coordination of labor to a single end. The trouble is 
that that end is not the interests either of society as a 
whole or of the laboring body as a class ; it is the interests 
of a set of barterers and capitalists who control and direct 
the coordinated organization for the most efficient produc- 
tion, not of the goods which society wants, nor of the 
wages which labor wants, but of the net profits which the 
barterers want. It is the height of absurdity, or of worse, 
for practical business-men, knowing what they are talking 
about to speak of the interests of capitalism and labor as 



528 THE COST OF COMPETITION 

being Identical. They know perfectly well that all com- 
mercial success consists of keeping down the rate of wages, 
which enter into costs, and of keeping up the price to the 
consumer, as the only means of getting a maximum mar- 
gin of profit. It is equally absurd, although not so repre- 
hensible, for them to contend that only by working in har- 
mony can capitalism and labor find anything to do. 
Capital, — material capital, of buildings, tools, etc., — and 
labor work in perfect harmony now, and always have done 
so. It is only capitalww which is in contention with 
labor. 

The reason why contention exists is because the competi- 
tive wage-system relies upon its presence for the settlement 
of that ever-present question, the current rate of wages, and 
emphatically refuses to rely upon anything else. The only 
reason why labor has any trouble in finding anything to do, 
any capital to work with, is because capitalism cuts off the 
purchasing-power of the consumer. The sooner capitalism 
fails to find a basis for further existence at all the sooner 
will labor find its first freedom to cooperate with capital, 
and the better off will be the laborer, the consumer and 
society as a whole. 

The man who denies, or even neglects, these fundamen- 
tal facts of competitive commerce in his arguments about 
industrial affairs forces his hearers into the painful task of 
classing him as either shallow or Insincere. The facts 
are patent enough. The Interests of the several economic 
classes and the myriads of parties to modern business are 
hopelessly antagonistic. It Is the business of " business " 
to have them so. Every move of the directors of Industry, 
every '' scoop " of a rival, every victory won over a 
strike, every franchise secured, every law passed In the 
Interests of the profit-seekers, but widens and deepens the 
gap between them, — and Incidentally makes commercial 



FUTURE PROGRESS WITHOUT POVERTY 529 

negotiation the more remunerative because the more diffi- 
cult. Nor will the abyss be bridged by saying that it 
does not exist. The gulf will be spanned only at the 
cost of a complete revolution of our present industrial 
policy. 

This gulf is nothing more than the lack of unity, the 
enforced antagonism, between every man and his com- 
petitor in business. In each individual case it seems a 
minute thing» Integrated to the limits of the nation it 
becomes a national calamity. It is this which makes of 
our commerce one vast civil war: every man's hand raised 
against his neighbor. It is this which enslaves us indus- 
trially, employer and employee alike, despite our vaunted 
political liberty. It is this unnatural gulf which forces 
us to legislate constantly to its support, that it shall not 
sink into formless chaos from mere inherent instability, 
legislating ourselves at the same time both poor and 
wicked. It is this great Sunken Way, of devious, hidden 
profit-search. Into which is constantly pouring our best 
life and strength at gallop-pace, threatening outwardly to 
make of our national conquest of this virgin continent and 
its riches a final Waterloo for occidental progress and 
civilization. 

The Abolition of Economic Dissipation. There- 
fore will it sharpen our perception of this hidden pitfall, 
of these complex as well as obscure social reactions, if, 
after the previous analytical review of their present con- 
formation, we pass on to the future and consider the effect 
of their supposititious removal. In doing so it were wise 
to define carefully the premises for advance, as follows. 
We shall assume : 

(i) That in the prosecution of industrial life all Indi- 
viduals are guided solely by their selfish, material Interests, 
with no altruistic or patriotic regard for their country's 



530 THE COST OF COMPETITION 

interests nor any appreciation of its reward of fame and 
honor therefor.^ 

(2) That wherever a commodity is offered for sale at 
the cost of production only, it will be impossible for that 
same commodity to find a continuous market when offered 
at the higher price of production plus a profit; hence, 
that no artificial compulsion, necessarily incomplete in its 
enforcement, need be relied upon to abolish barter if the 
natural principle of sale at the cost of production be 
adopted and incorporated into public law and opinion. 
In other words, referring to the two Divisions of industrial 
and commercial activity tabulated on pages 142 and 143, 
it is proposed to totally eliminate Division II, in the fu- 
ture, so that the price at which each commodity Is sold shall 
be made up of the items of Division I alone. 

3. That the sole guiding principle of economic justice 
is to be the conservation to each individual of the value 
which he produces. 

The attainment of this last principle would obviously 
leave not only the sick, the insane and the criminals as 
paupers upon the public hands, as they are now, but all the 
other non-producers as well: the orphans, the aged and 
infirm, and that minority of healthy adult women who 
have not been educated into productive Industrial habits. 

1 This stand is taken in the premises because, in regard to the future, 
the writer wishes his present predictions to be based upon no ethical 
assumptions whatever, to be open to no indictment for weakness from 
idealism. He does not believe that this supposition truly and broadly 
applies, either now or in this supposititious future ; but for the present he 
wishes to be cold-blooded and " practical." In regard to the selfishness 
of existing conditions, all that he has said is that of all the impulses, 
selfish and unselfish, which are felt by human nature, the competitive 
economic system (so far as material prosperity or the lack of it can avail) 
sustains and encourages all the selfish ones and starves and discourages 
all the unselfish ones. All that he wishes to bring out at present is the 
obverse of this: that the abolition of barter will sustain and encourage the 
unselfish and tend to exterminate the selfish. 



FUTURE PROGRESS WITHOUT POVERTY 531 

Whether they are to be cared for by public appropriation 
or by private subscription, or the ethical effects of either 
upon the community, Is for the present to be eliminated 
from the discussion. This present synthesis Is to be pro- 
jected from the cold-blooded premises delighted in by the 
" practical business-man," viz. : 

(a) Universal selfishness: "Every man for himself 
and the devil take the hindmost " ; 

(b) To each man the value which he produces. 

But It Is to be understood at the start, as Incidental and 
essential to this last, and as these same practical men very 
Inconsistently omit from their premises, that the laws of 
the land, hacked by public opinion, shall prohibit any man 
from attempting to take from either laborer or consumer 
any portion of the value which the latter has produced. 
The efforts of each man In his own behalf must be exerted 
against nature, not against man. 

This Is to be accomplished by the enforcement of these 
following statutes : 

I. That each man's produce, be It what it may, must 
he sold at cost to the community as a whole, represented 
by its public agent, and to the community only; in other 
words, that the legal ownership of all value produced 
within the community shall be vested as completely in its 
Central Office as is now the case within every factory. 
The community must guarantee to each producer the full 
value of his efforts, and to itself the most perfect free- 
dom of exchange. Those are the sole duties of civilized 
Exchange. The only known method of meeting them is 
that of the public Central Office, fixing prices at a money- 
rate determined by a pure balance between supply and 
demand, as free from barter as Is the purchase of postage- 
stamps. The community must also prohibit any attempt 
upon the part of any individual at acquiring Value by 



532 THE COST OF COMPETITION 

any other means than by producing it. This last, at 
present, it does not pretend to do. Yet it is a policy the 
justice of which the most ambitious profit-seeker cannot 
publicly decry. 

2. That, as the only means necessary to enforce the 
preceding, all prices, whether of commodities, of manual 
labor or of intellectual service, must he publicly fixed and 
publicly varied, and not subject to private, individual ma- 
nipulation. They are to be fixed, naturally, 

{a) By public ofllicials, acting publicly upon current 
public records, such as the census-bulletins; all ledger- 
accounts, bank-accounts, check-books, etc., being consid- 
ered at all times public; 

{b) So that the price just equals the cost; that is, so 
that the commodity in question shows as little deficit or 
surplus of cash, from year to year, as possible ; 

{c) So that the volume of supply shall be similarly 
adjusted to meet the volume of demand, so that as little 
deficit or surplus of goods as possible shall occur. 

The Natural Wage. It is to be noted, in passing, 
that the last two subheads in combination amount to the 
fixation of the price of labor selecting specialization upon 
that particular commodity. That is to say, the daily wage 
for a certain grade of labor being the same for all com- 
modities, as would naturally be so, the superintendent of 
the production of each commodity would so arrange the 
hours and conditions of work as to attract labor to that 
service when more goods were in demand, or vice versa; 
which amounts to exacting less or more work per dollar. 
This process is the natural operation of balance of Supply 
and Demand. It is the process now relied upon, exclu- 
sively of all others, in the employment of labor to supply 
the demand felt by the factory. To supply the demand 



FUTURE PROGRESS WITHOUT POVERTY 533 

felt by the consumer, however, this balance Is in action 
to-day only obscurely and fractionally, owing to the pres- 
ence of barter. Then it would have full swing. 

This is the general policy of the post-office, for instance, 
in Its relations with public demand. In its relations with its 
employees It is forced, by the competitive-wage system, 
into exact parallelism with all other employers. There- 
fore, while It offers an excellent example of the Natural 
Price to the consumer. It gives no hint of what may be the 
Natural Wage for the labor in its employ. 

The Comparative Cost of Public and Private 
W^ork. At this point in the argument naturally arises 
this most voluminous question. Into the maze of statistics 
which It involves we shall not plunge here. Following 
the underlying idea of the work, which Is to reveal clearly 
the relationship of cause and effect between facts already 
well known or easily ascertainable, rather than to pile up 
novel and undigested facts, we shall confine ourselves to 
some general considerations. 

In comparing the public with the private organization 
of industry there Is no objection to admitting at the start, 
if it could be of any satisfaction to the advocates of pri- 
vate methods, that the cost to the organization itself Is 
probably greater under public than under private organiza- 
tion. But the fundamental difference is that under public 
organization the directorate and the consumer are one, 
whereas under private initiative they are not. In the 
latter case the cost to the organization and the price 
demanded of the consuming public are so very different. 
So this much must be said here, as the lesson to be learned 
before any intelligent use of statistics may be made what- 
ever, that if all the " costs " which are ordinarily, legally 
and legitimately charged against the placing of a thing 



534 THE COST OF COMPETITION 

upon the competitive market by private enterprise, — 
including rent, interest, dividends, profit, competitive ad- 
vertising, legal counsel and the other " costs of doing bus- 
iness," — are to be charged in against the public organiza- 
tion for the same service, then there is no reason what- 
ever for prefering the public to the private policy. So 
long as profits are made, by charging the consumer more 
than the bare cost of supply, those profits will inevitably 
be exaggerated and inevitably stolen. So long as interest 
and rent are regarded as properly to be charged and col- 
lected, they will be inflated to the last degree by the 
monopoly of land-control and by the " watering " of 
stock. So long as combative advertising and self-seeking 
litigation are rewarded, as aids to the above, by an expan- 
sion of income, the greed and contentiousness of human 
nature will develop them into the degree of a frenzy. 
Whether organized in the name of the entire state or in 
the name of a fraction of the community only, will make 
not the slightest difference as to the result. In either case 
the organization will soon gravitate into the hands of men 
of the ward-politician and financial-promoter class, — for 
they are one. The individual producer, the individual con- 
sumer and the common stock-holder will be alike the help- 
less losers, and the coterie of bosses will be the gainers. 
In the one case the methods of these bosses will be politi- 
cal; in the other they will be commercial. But the result 
will be the same. Prices will run high, and service, in 
point of both quantity and quality, will run low. Idleness, 
both enforced and voluntary, will be common. Corrup- 
tion, both public and private, will run rife. Not until the 
interest-account, the dividend-account, the secret-salary 
account and the " cost-of-doing-business " account are cut 
out of the cost-ledger entirely, — absolutely by public 
opinion and the common law, and actually to what degree 



FUTURE PROGRESS WITHOUT POVERTY 535 

these may be effective, — will these phenomena disappear. 
Then, again, it will appear that it makes slight differ- 
ence, as to the results attained, whether the organiza- 
tion be public or private. The liquor-systems of Gothen- 
burg and other places, for instance, organized and 
capitalized privately, but operated without attempt at a 
profit, as a public trust, have proven almost as effec- 
tive for the suppression of all the evils of liquor-traffic as 
could any similarly operated public organization. Only 
it is unimaginable that any private organization. Isolated 
in its methods from all of its neighbors, could or would 
arise and be operated upon this non-profit-seeking plan 
upon a scale effective for the solution of our national prob- 
lems. It is quite imaginable that a public organization 
both could and would do so; for the organization exists 
in readiness, needing only its deliberate direction toward 
this work. That is almost the whole of the controversy 
between public and private ownership or operation.^ 

The reminder which has just been made, that the sav- 
ing in internal cost, in the case of private enterprise, is of 
little Interest to the community because of the lack of Its 
Identity with the price asked of the consumer, together 
with our long portrayal of the rate at which their differ- 
ence — ^barter-cost plus profit-tax — have grown to outra- 
geous proportions, ought to settle this question of compara- 

2 There is another feature of this comparative cost-of-service question 
which is worthy of mention in passing. This is the common habit of ignor- 
ing the evidence. For instance, the common attitude of mind in regard to 
governmental work is that "of course" it costs more than private work; 
yet the evidence which should lie back of this attitude I have never been 
able to find. What is offered usually melts upon examination. But more 
often none is offered or asked for. " Everybody knows that! " is passed 
and accepted as sterling wisdom. Here is an instance. One of the daily 
journals of New York which stands with the topmost in reputation for 
ability, and upon which I myself rely daily as the best newspaper in the 
land, is uniformly bitter in its editorial attitude toward all which these 



536 THE COST OF COMPETITION 

tive cost. If not, it ought at least to reopen it so widely 
as to amount to the same thing. Nevertheless, it is worth 
while to examine more at length the common statement 
that a barterer, seeking only his own gain, can hire and 
direct a superintendent or a laborer very much more effi- 
ciently than can a salaried agent of the community hire 
the same man to do the same thing; and therefore that, 
although commodities may be offered by public agents at 
the cost of production, private barterers will still be able 
to offer the same articles at a lower price and have margin 
of profit. 

The reply to this is threefold: 

( I ) It does not seem probable upon the face of it. 
There is no visible reason why production can be superin- 
tended any more efficiently under one plan than another. 
The pure superintendent has a much greater incentive to 
efficiency in the case of public than of private control. As 
to the barterer, while he plainly experiences an induce- 
ment to effort under private, profit-making organization 
of a sort which finds no place under public organization, 
it is not an inducement to productive effort, lowering costs 
and prices at all; it is an inducement totally to neglect 
productive processes, relegating them to the care of his 

pages advocate. Incidentally, however, it prints the following in its edi- 
torial columns: 

*' A Startling Contrast. — A disclosure just made to Congress should 
have results. It appears that the battleship Connecticut, built directly by 
the government at the Brooklyn navy-yard, was, at the end of September, 
practically just as far advanced as was her sister-ship, the Louisiana, 
under construction by a private company at Newport News. The Connec- 
ticut had cost $2,234,937. The Louisiana had cost $3,548,250. The appar- 
ent saving in cost by direct governmental construction is thus $1,213,313. 

" This difference is enormous, amounting, as it does, to more than 50 
per cent, of the cost of the cheaper vessel. At this rate we could build 
three battleships in navy-yards for the price of two in private yards. And 
yet it is notorious that work done by private concerns, with the spur of 
self-interest constantly applied to cut down the cost, can be done more 



FUTURE PROGRESS WITHOUT POVERTY 537 

salaried superintendent, and to devote himself more 
assiduously to barter, or to raising the price to the con- 
sumer.^ This, in a nut-shell, is the basis for all agitation 
in favor of public ownership: that private profit-seeking 
gives to each man his income in a manner which constitutes 
it the greatest possible inducement to him to work against 
the interests of the consumer and the least to work for 
them. All successful business shows the result of this 
policy. Not only it, but the entire superiority of American 
over European commercial methods, in fact, stands as evi- 
dence that in competitive business it pays to neglect almost 
altogether, as regards the time, study and effort of the 
head officials themselves, the refinements of efficiency in 

cheaply than like work under the direction of the government. Few men 
are so keen to save public money as all men are to save their own. This 
enormous disparity is not explained, nor has any effort been made to 
explain it. . . ." 

The importance of this quotation does not lie in the item of news. Any- 
one who seeks can find thousands like it. It lies in the peculiar persistency 
of the tradition, in the minds of men as intelligent as these editors, that it 
is still " notorious " that public work costs more. But the degree to which 
private-corporation work costs more is now getting to be something more 
than notorious; it is infamous. How can such statements as the above be 
continued in by men of public responsibility when for a quarter-century 
the various socialistic explanations of the egregious cost of work done for 
the sake of gathering the dividend-and-profit tax connected with it have 
been rife in all commercial lands? To disagree with socialistic explana- 
tions without substituting others is easy. To fear their logical conclusions 
is still easier. Both attitudes of mind are common. But it is not so com- 
monly realized that, in order to justify their prejudices, their fears or their 
simple ignorance, men who have accepted the responsibility of public 
leadership are so frequently engaged in gulping down inconsistencies as 
bald as the one just mentioned. 

3 A friend of mine, an official of a manufacturing corporation of mod- 
erate size, was once party to a conference of the leading manufacturers in 
his own line, met in New York for the purpose of an " understanding." 
In the course of the discussion he spent some words upon the reduction of 
the cost of production. One of the older and more successful members of 
the group stopped him with : " Oh, hang all that. The money isn't made 
in the factory. It is made right here." 



538 THE COST OF COMPETITION 

production, In order to control more effectively higher 
prices in the market. If barter be regarded as an inevi- 
table accompaniment of exchange, such a policy is undoubt- 
edly the better one. If it is not, however, the fact stands 
as additional evidence of how the barter-system prevents 
the consumer from getting the benefit of every possible 
reduction in cost of production. 

(2) Statistical records universally uphold the correct- 
ness of expecting the abolition of barter to reduce costs. 
All existing progress in the line of public ownership has 
justified itself by cheapened cost or better service, or both. 
What denials of this statement have reached our eye are 
uniformly invalidated by their arbitrarily figuring Into the 
book-keeping the very items of profit, Interest, etc., which 
public ownership Is expected to and which It does eliminate. 
But as this volume deals only Illustratively with statistical 
support the reader is referred elsewhere for these data.^ 

Although It Is commonly said that the post-office 
operates at a deficit, this statement Is not true. Even 
accepting the figures as they appear In the reports, the 
average net result of surpluses and deficits, taken over a 
number of years, just about comes to zero. But this 
neglects the all-Important fact that the heaviest class of 
mail-matter, the second. Is handled at so absurdly low a 
rate, at a mere fraction of the cost of the service, that Its 
continuous operation constitutes one of the baldest cases 
of " graft " upon the community which Is now going 
unprotested. Moreover, the one source of real danger of 
a deficit, these second-class rates, exists solely because pub- 
lic opinion upholds the profit-making plans of the period- 
ical press whose Influence keeps it there. 

Again, the only field In which the superiority of public, 

4 Bliss's " Encyclopedia of Social Reform," Bemis's " The City for the 
People," etc. 



FUTURE PROGRESS WITHOUT POVERTY 539 

non-profit-seeking organization has a chance to evidence 
itself in the post-office is in the mere collecting, sorting and 
delivery of the letters. All of the actual transportation 
of mail-matter, by land or water, both interurban and 
between post-office and railway-station, Is done on the 
profit-seeking plan, by private enterprise. Here the gov- 
ernment pays not only the full cost of this onerous method 
of operation, but it pays much more. The average price 
charged by the railroads for carrying mail-bags is several 
times that charged the express-companies for the same 
service ! The superficial will say, " See the weakness of 
governmental organization! " But is it so? In the first 
place, are the rates high because of corruption or of Ineffi- 
ciency on the part of the governmental agents? If the 
first, then the railroads corrupted them. There Is no 
reason under heaven why these agents, untempted, should 
choose to elevate the rates. There Is no reason why the 
railroad people, If paid In salary Instead of In profits, 
should wish them elevated. If the second, the railroads 
at least took an evil advantage of this Inefficiency. If pub- 
lic opinion and corporate conscience should both insist that 
there is a natural worth to the service, and that to take 
more than the publicly declared statement of that worth 
were robbery, as Is actually the case, then this thing could 
not happen. But In the present state of public opinion, — 
upholding, praising and richly rewarding, as a skillful con- 
duct of " business," any possible elevation of prices not 
accomplished by physical violence, — this result is the only 
one naturally to be expected. 

As to the government's forcing the railroads to accept 
from It only what the express-companies get, the whole 
object of this book is to call attention to the fact that it 
would cost more than it is worth. The post-office Is not 
equipped for successful barter. This Is the reason why 



540 THE COST OF COMPETITION 

its service is the best and the cheapest of any which we 
have. The express-companies' and telegraph-companies' 
rates are higher than the postal rates (in the fields where 
the two are equally prepared to do business) chiefly 
because these corporations are commercially formidable 
enough to extract low rates from the railroads. Warfare 
is always more costly than peace. The proper remedy is 
not to inject that most costly virus known as ability-to-con- 
trol-prices into the postal system, but to eliminate that 
poison from the railroads. The way to bring down 
the interurban cost of mail-transmission is plainly not to 
equip the post-office department for comercial barter, 
which would make matters only worse than they are now, 
but to reorganize the railroads as public carriers in the 
true sense of the term, so that there would no longer be the 
slightest temptation to overcharge anybody, either the 
post-office or the people.^ 

The same remarks apply to the postal frauds just 
revealed: they have not occurred in the form of profit- 
making in the transmission of intelligence, by charging 
higher rates than the service costs. They have occurred 
where the Department comes Into contact with profit-mak- 
ing corporations outside, where there Is a temptation to 



5 In the mailing of a portion of this manuscript it developed that, 
owing to the present absurd and quite unnecessary system of postal 
charges, it was going to cost as much to deliver this one package at a 
single address, by mail, as it would cost to have over fifty lighter pieces 
delivered at fifty different and distant addresses. The clerk therefore 
advised the shipment of the package by express. 

To the superficial mind here is a fine instance of the superiority of the 
privately operated express-companies over the publicly managed post-office. 
But is it so? The sole reason for the higher charges of the post-office in 
this class of work is that it persists in regarding itself as a carrier of let- 
ters only, and refuses to equip itself or to reform its schedule of prices in a 
way fit to rival the express-companies in the carrying of packages, — which 
defect is no essential part of its public system of operation. On the other 



FUTURE PROGRESS WITHOUT POVERTY 541 

share In those profits. They have consisted, as has all 
governmental corruption, of collusion between men withm 
the non-profit-making Department with the profit-seekers 
outside. The men within are expected to conserve the 
people's interests and to remain passive in the^ face of the 
greatest temptation; and in the great majority of cases 
they do so. The men outside are entirely freed, in public 
opinion, from a like duty of conserving the people'^s 
interests. They may not only abstract the community's 
money, by exalting prices to the consumer to the utmost 
of their ability, without effective rebuke, but they may 
add insult to injury by using a portion of the tax thus 
wrongfully squeezed from us to the corruption of our pub- 
lic servants, as a means to the expansion of that tax, and it 
is all " good business." 

In making these comparative investigations of cost, too, 
the advocates of barter-control utterly neglect to bring out 
the failures upon their own side. The enormous percen- 
tage, in the neighborhood of ninety out of each hundred, 
of failures of all business-ventures reported by Bradstreet 
they do not so vehemently advertise. Nor does Brad- 
street reveal the true measure of failure. What he reports 
are failures to make a profit out of the community. It is 

hand stands out most prominently, as an Indicator of the true state of 
affairs, the fact that this post-office clerk, because his service was organized 
for the sake of its task and not for profit, guided me elseivhere to the en- 
joyment of a rate cheaper than he could offer! 

V^here else, let it be asked, in the whole realm of stores and offices 
frequented by the consuming public, outside of the libraries and custom- 
houses, could any attendant guide a patron elsewhere, to the securmg of 
lower price, better quality or greater convenience than he himself had to 
offer, without endangering his privilege of livelihood? What does this 
indicate, let it be asked and pondered most seriously, as to the myriad of 
opportunities for greater value or convenience at a lower price which is 
daily being lost to the millions in their dealings with the competitive 
system, and of njohich they are never directly conscious? 



542 THE COST OF COMPETITION 

the gigantic successes at making a profit out of the public 
which constitute the true failures at wealth-production for 
the community.^ This fact they are most careful not to 

6 While it is impossible to present more than a suggestion of the enor- 
mous mass of evidence of fact which is constantly arising in the com- 
mercial news of the day, space must be taken for occasional examples. 
The following is an editorial from The Outlook for November 14, 
1903: 

" Were it not too serious for humorous treatment, the testimony which 
has been taken before the courts regarding the management of the bank- 
rupt United States Shipbuilding Company would furnish a fit theme for 
the author of some new ' Mikado,' who wished to exhibit topsy-turvydora 
in a realm nearer than Japan. We have refrained from commenting upon 
this testimony until the whole of it should have been taken, because we 
do not wish to judge of any man's responsibility for the deception of 
investors until he himself shall have been heard. Already, however, it 
has been made clear that the nominal directors of this great combination 
were for a time at least mere puppets moved by the hands of promoters. 
Some of the directors were young men who had never had a bank-account, 
and who had only a doubtful title to a single share in the stock of the 
corporation they nominally managed; yet these young men reorganized a 
company with nominally forty-five million dollars, and issued in addition 
twenty-six million dollars of bonds in payment for properties which they 
purchased, to be put on the market for sale to trusting investors. The 
largest of these purchases was^ the Bethlehem Steel Company, for which 
ten million dollars' worth of bonds and twenty million dollars' worth of 
stock were given. When one of the dummy directors was asked what he 
knew about the Bethlehem Steel Company, for which he had voted to pay 
such an enormous price, he replied that he knew practically nothing, 
except that he thought that it was located at Homestead. When asked 
by the lawyers if he would be surprised to learn that it was located at 
Bethlehem, he replied that he would not. 

" Last week, before the completion of the testimony before the court, 
further light was thrown upon the management of this great concern by 
an authority whose evidence must be accepted as judicial, though subse- 
quent testimony from Mr. Schwab may possibly explain away the part he 
now seems to have borne in the transaction. Ex-United States Senator 
James Smith, appointed receiver by the court, has reported the conditions 
which he has found. Summed up in the briefest possible way, Mr. Smith 
finds that the nine shipbuilding and steel companies consolidated into the 
trust had a self-estimated value on July 13 of last year of $15,400,000. 
The price paid by the trust for these properties was seventy-one million 
dollars in bonds and stocks. The twenty-six million dollars of bonds paid 
for them was nearly double their self-estimated value. The forty-five 



FUTURE PROGRESS WITHOUT POVERTY 543 

bring out. Both what they say and what they omit to say 
stands as a sign of their hopeless partiahty, of the heavy 
pecuniary interests they have in throwing the conclusions 

million dollars of stock represented just so much water — or rather air. 
The prospectuses issued to investors figured the previous profits of the 
merged companies unreasonably, if not fraudulently. At some points it 
seemed to the receiver that the records had been willfully falsified. Leaving 
out the Bethlehem Steel Works, the profits of the individual ship-yards' 
earnings really amounted to less than nine hundred thousand dollars, but 
were represented to be two million two hundred thousand dollars. Yet 
the greatest of all injuries to investors, in the receiver's opinion, was in 
the transactions relative to the Bethlehem Steel Works. Their self-estimated 
value, deducting the underlying mortgages, is reported to have been little 
more than four millions. Yet Mr. Schwab received for them ten millions 
of bonds and twenty millions of stock, with the further stipulation that the 
bonds he received should carry with them voting power, so that he was 
given a majority control of the entire shipbuilding combination. He was 
also given a special mortgage upon the Bethlehem works to secure his 
bonds, and his appointees managed the works so as to increase their value 
at the expense of the stockholders of the trust. During the time the Beth- 
lehem company was nominally managed by the trust, it earned profits, 
according to Receiver Smith, approximating two million dollars a year. 
None of this sum was turned over to the United States Shipbuilding Com- 
pany to save it from bankruptcy, but all was used in extending and improv- 
ing the plant at Bethlehem, so that if the trust went into bankruptcy the 
holder of the mortgage on the Bethlehem works would get them back worth 
much more than when he sold them. In the receiver's phrase, the manage- 
ment of the affairs of this great corporation had the character of * an 
artistic swindle,' and he declares that under present laws all those who 
received stock as a bonus upon the sale of their plants can be held liable 
for the indebtedness of the combination. If this be law as well as justice, 
the creditors of the combination will be able to enforce their claims against 
those responsible for its mismanagement. The creditors, however, are not 
the only sufferers from bankruptcy of this sort. The law ought to pro- 
tect the investors who put their money into the stock. Almost the first 
duty of the law is to protect the security of property; in countries where 
property is insecure, barbarism is supposed to prevail. It is a disgrace to 
our civilization that property invested in industrial corporations should be 
as insecure as property in darkest Africa." 

This is only a single instance, and its discussion confines itself entirely 
to the wrongs done the minority stockholder. But how about the much 
greater wrongs done to the consumer? The swindle revealed by Mr. 
Thomas W. Lawson in the issue of E'verybody's Magazine for September, 
1904, is along parallel lines, except that the figures are greater. But all of 



544 THE COST OF COMPETITION 

in one direction rather than the other. We doubt the 
value of public ownership and operation not because it 
has failed in the interests of the public, but because it has 
failed in the interests of the barterers, who have every 
inducement to blind and control public opinion into the 
belief that the two are synonymous^ 

Any reader of these pages can find in his weekly review 
ample current evidence of all this sort of thing. He will 
find, however, no record of publicly owned enterprises 
going back into private ownership except because they 
have proven themselves capable of earning a profit, and 
then against the will of the consumers and at the behest of 
the political machine: an organization of barterers desirous 
of enhancing the selling-price from its natural coincidence 



such cases taken together constitute but a small fraction of what is going 
on all the time, for these are only the few which are discovered ; the 
great mass of them are too skillfully successful to be caught. Nor are they 
in any wise to be seriously treated as exceptions. They are the rule. Nor 
are they at all abnormal. They are the legitimate development of the 
simple process of barter instanced as between fisherman and hunter. Once 
admit it to be right for one man to deceive another as to the true value of 
an article, to the extent of one penny of profit, and this is the scale of 
deception and of profit into which human nature will inevitably gravitate. 
"J" The steam-roads frequently reveal the same thing: the unprofitable 
mismanagement of the property in private hands, creditors and stock- 
holders losing their rightful dues in the face of high prices paid by the 
consumer, until failure is announced and the wreck is passed over to the 
receivers, the salaried agents of the community, who then operate it in 
the interests of the community until it is again solvent. It is then handed 
back to the unpunished dissipators of the public wealth as a tool for the 
further extraction of profit from the public. It is when private control 
has proven its incapacity that public management is universally fallen 
back upon, to succeed by its superior reliability, efficiency and unity with 
the people where the other has failed. A few years ago it was reported 
that over forty per cent, of the roads west of the Missouri were similarly 
in the hands of receivers. Why were they not kept there, confiscated by 
their mismanagement in hands seeking only the exploitation of the public, 
to be dedicated forever after to the service and the interests of the public 
whose power and efficiency alone made, protected and saved them? 



FUTURE PROGRESS WITHOUT POVERTY 545 

with cost back into regions where a profit is possible, where 
there is a margin of plunder over and above the cost of 
production for division into " boodle " or " graft.'' ^ 

(3) It has already been established that the average 
cost of competition is at least twice that of production ; if 
in some services it is less, in others it is much more. It 
has also been established that, given external conditions 
as they are to-day, this proportion cannot be diminished 
at will ; it is fixed by forces beyond all human control short 
of the unified action of the community as a unit. There- 
fore, barter cannot undertake the direction of production 
of any commodity unless there is reserved to it a margin 
over the cost of production, in order to cover the heavy 
barter-costs now prevalent and still leave a net profit of 
something like two hundred per cent, on the average 
(taking in all the exchanges intervening between the true 
raw material and the finished product in the hands of the 
consumer) . Even if it be granted, temporarily, that there 
is something in this argument, that perhaps private direc- 
tion could reduce the cost of production somewhat below 
what public control would incur, we are asked to believe 
that this difference is going to be sufficient to cover another 
item twice as big as the total cost of production. 

For it must be remembered, in discussing this question, 
that when any given service is taken over from private to 
public ownership, a comparison of the prices charged does 
not reveal the effect of the removal of barter from all of 
the service for which the visible price is paid. Take, for 
instance, the street-railways. The service for which the 
public pays a nickel a ride is not merely that performed 
under the control of the street-railway company. It in- 
cludes an interminable array of accessory services scattered 
all over the land : the mining of coal and the manufacture 

8 The best instance of this i§ th? Philadelphia gas-works. 



546 THE COST OF COMPETITION 

of mining-machinery; the transportation of coal; the design 
and manufacture of power-house apparatus and electrical 
machinery, with all the schools contributive thereto and 
the Patent Office back of that; the manufacture of lubri- 
cating-oil, cars, rails and transfer-checks: all of these are 
paid for by the passenger's fare, and to its magnitude 
every one of these contributes its quota of cost of com- 
petition. The service from which barter will be removed 
by the municipalization of the road is merely that of 
motormen, conductors, etc. The sort of barter removed 
will be merely that of dividends (upon watered stock), 
salaries of unnecessary officials and a variable quantity of 
legal influence against the people. 

All of these services not locally visible may be lumped 
together as raw material. This amounts, roughly, to a 
third of the entire fare charged. We may assign a third 
each to local labor and barter. But this shows the cost of 
competition as only equal to that of production, whereas 
twofold was just mentioned as the true proportion. The 
reply is that in street-railroading the cost of competition, 
here vertical only, is much less than the average in other 
services. No commercial travelling, no commissions, no 
advertising, is needed. It is these '' natural monopolies '' 
for which alone the public is now beginning to demand 
public ownership, which offer the least argument in favor 
of the step. 

The proposition is absurd from every direction in which 
it is honestly and impartially approached. This is the 
saving feature of the situation. Eventually the truth will 
out. In order that community ownership and operation 
should supplant private methods it is not necessary for the 
few existing cases of the former to demonstrate a striking 
superiority over their profit-seeking compeers. It does 



FUTURE PROGRESS WITHOUT POVERTY 547 

not seem that they have done so in the past. While the 
saving and the success have been always, or at least 
usually, there, it has been, in one sense, moderate. It 
has already been explained how this is natural and In- 
evitable. But this fact has not hindered the very steady 
spread of public demand for public ownership. Even if 
this moderate success had been moderate failure instead, 
it would not have hindered this spread. No statistical 
proof of moderate failure will hinder it. So far as one 
is able to observe, no existing public plant ever derived its 
iactual undertaking from the economic or ethical argu- 
ments in favor of public ownership. In nearly every 
case the policy was adopted by its community because all 
other lines of effort at securing good service at moderate 
price, coupled with freedom of its government from 
corporate influence, had failed. If the confused propa- 
ganda of the socialists and the demagogues, against which 
the mouth-pieces of the profit-seekers direct such constant 
outcry of condemnation, were the only force propelling 
us toward public ownership and all that it will bring, 
there would be little danger of a revolution. Fortunately, 
we have something much more powerful to rely upon as 
motive power, namely, the iniquities of the profit-seekers 
themselves. It is the powerful commercial men and or- 
ganizations, hating and scorning as they do all the 
theories of the various economic apostles, who have 
wielded the forces in the past which have already driven 
the people, maddened by the growing immoderation of 
their waste, faithlessness and extortion, to turn first from 
orthodox politics to mugwumpery, then from free trade 
or tariff-reform to free-silver populism, and now from 
free silver to the open advocacy of the municipal owner- 
ship of public monopolies and the governmental control 
of the rates of those corporations which remain private. 



548 THE COST OF COMPETITION 

It is this same irresistible commercial power of the day 
which, having been given here in America more rope 
than elsewhere in modern history, is now about to com- 
pletely hang itself, by forcing the public into an un- 
answerable political demand for complete socialism. It 
is not such books as this which are driving us on. Nature's 
law of evolution lays the guiding rails; we sermonizers 
grease the curves and oil the bearings, that grinding 
friction and heat of impact may be lessened as we go; 
but the power that is driving us along this road is that 
very insatiate greed of the competitive system which we 
here decry — heeding naught but itself and its desires, 
scorning all danger of effective arrest, reckless of the anger 
and power of a patient public. Into the furnace of this 
locomotive engine the fuel is being shoveled fast. Each 
new case of private graft, every new sign of instability 
of prices, each fresh investigation of corporate crooked- 
ness, from the Standard Oil of thirty years ago to the 
Mutual Insurance rottenness that is now oozing into 
light of day as these words are written — all serve as oil 
and fat-wood to feed the fire of public indignation. 
There is little need for public ownership to prove that it 
is better. The alternative which we now enjoy is not 
only so infinitely worse; it is fast growing absolutely 
intolerable. 

Finally, if there were anything at all seriously back of 
the arguments against public control, all that is needed to 
establish the fact is a fair trial between the two plans. 
Most of the gentlemen controlling the services imme- 
diately threatened with the proposed change are men of 
sense; they could not be expected to object to this fair 
trial by jury. Yet they do so object, most strenuously, to 
the extent of incurring heavy expenses for lobby and for 
legal counsel, for influencing the press, etc. The only 



FUTURE PROGRESS WITHOUT POVERTY 549 

result attained thereby is the addition to the evidence 
already in the public mind of the conviction that they 
must be now drawing big profits from the business or they 
would find neither impulse nor resource for so expensively 
obstructing an experiment which could not, In the nature 
of affairs, do aught but bring out the truth as cheaply as 
truth is ever obtained. Let those who are so fearfully 
considerate of the tax-payer's interests exhibit some like 
concern for the interests of the profit-dividend-and- 
Interest-payer ! 

The Economic Gain of Cooperation to the Com- 
munity. The first consequence of the adoption of any 
such a public policy as that outlined above would be the 
gradual retirement of all capitalism, by the gradual trans- 
fer of all ownership of capital to the community and the 
cancellation of Its valuation, or capitalization, by means 
of a sinking-fund. This process has already been carried 
out completely In a few instances, and is already stably 
under way, with the funds accruing from prices lower than 
those prevailing under private operation, in many other 
cases. The process Is a simple one. There has never 
appeared to be any difficulty in hiring a superintendent 
who, when told that his duties were first toward the public 
rather than toward the Interests of a private board of 
directors, could not or would not do this thing conscien- 
tiously and well. In the few Instances of comparative 
failure the hand of some private corporation having a 
pecuniary Interest In the failure of the public enterprise 
was plainly manifest. 

It has been pointed out that the spirit of emulation has 
free play only in the ranks of the producers, and there only 
under repression by the presence of barter outside. That 
is, emulation in production is constantly aiming to produce 



550 THE COST OF COMPETITION 

ever at great and greater efficiency, and hence at steadily 
lessened cost. If this decrease in cost did but reach the 
consumer, the producer would receive the natural reward 
of his diligence in multiplied consumption of his goods; 
he would be encouraged and sustained thereby to further 
diligence. But at present it does not. In between stands 
barter, seeking not to lower prices to the consumer, but 
to exalt them (or when so seeking, doing so by methods 
which entail the exactly opposite result), seeking not to 
extend the volume of production and exchange, but the 
volume of profits, which reach a maximum only when the 
volume of exchange is far below Its possible maximum. 
Thereby the emulative spirit of the producers Is stifled into 
a minimum of activity. 

But with the legal fixation of all prices, by public foun- 
dation upon the cost of production, this emulation will 
find full sway. Between rival factories, localities, super- 
intendents and operatives the race to report the lowest 
cost of production will be keen. It will be much more 
so than at present for the following reasons : 

( 1 ) The results of the rivalry will be made public, 
and both the material income and the fame and honor 
reaching a man will be dependent thereon. The superin- 
tendents and directors of production will then be as prom- 
inently before the public as are now the directors of our 
vast profit-seeking organizations. 

(2) The pecuniary reward for increased efficiency of 
production will be much greater. Now, with the bar- 
terers in control of all productive effort, the bulk of the 
natural reward for any decrease In cost of production 
either goes to them or Is lost to everyone In Increased 
barter-cost; in either case It never reaches those who 
earned It. 

In any such situation as that proposed. It will soon 



FUTURE PROGRESS WITHOUT POVERTY 551 

become apparent to the superintendents of production, 
striving for this reduction of cost, that one of the heaviest 
items upon their cost-sheet is the interest paid upon land, 
buildings and tools utilized. To cover the depreciation 
of the latter two there must already be In operation some 
form of sinking-fund, the current payments to which are 
made by the producers. No matter what the form of 
organization or what the methods of book-keeping, this 
is now being done in every productive establishment; If 
not attended to consciously, methodically and wisely it 
will maintain itself automatically, if clumsily. Therefore 
would the idea be Inevitable of somewhat Increasing this 
sinking-fund (or of starting a duplicate) with the object 
of gradually canceling the capitalization of the capital 
In use, leaving the latter for use free of all Indebtedness. 
This is at present a standard policy in the minority of 
Industries not operated for the purpose of profit-making, 
and Is always successful and profitable. These services 
are ultimately conducted by the producers without the 
payment of a cent of Interest upon capital utilized, the 
entire capitalization havirfg been canceled and eliminated 
by the gradual operation of a modest sinking-fund. But 
In any productive service operated for " business " Instead 
of for the service, it is to be remembered, such a policy 
Is the last one desired. The prime object of the barterers, 
who are then In control, Is to increase the capitalization, 
not to decrease it. When other methods fail, or even 
before they do, the stock Is watered In order to Increase 
the capitalization of the, capital in use, to thus deliber- 
ately increase the interest-payments charged up in the 
price to the consumer, as one of the costs of doing bus- 
iness. This is one of the many ways in which barter is 
continually seeking to exalt the selling-price to the con- 
sumer, although ever pretending that Its sole ambition 



552 THE COST OF COMPETITION 

is to reduce the selling-price, — whereby it forswears its 
own honor and self-respect and the trust of the com- 
munity at one and the same time.^ 

The result of such a natural policy, therefore, would be 
the completion of the list of specified plans (page 531) 
by the addition of the following plank, viz. : 

(3) The ultimate ownership of all the capital of the 
country by the community. 

This plank is one already widely advocated throughout 
the land. It was not included in the original premises of 
this synthesis for this reason, the weight of which should 
be clear from the general analysis now complete : 

The ownership by the community of the capital utilized 
in the nation's productive enterprises does not necessarily 
protect the consumer from extortion, and the community 
from the misery and disgrace of slums and Submerged 
Tenths, if unaccompanied by the public condemnation of 
all profit-seeking and all variability of prices and wages. 
Witness, for example, the public ownership of street- 
railways which are operated by private companies, 
Chicago's river-tunnels, New York's docks, etc. Upon 
the other hand, the public condemnation of all variation 
of prices must necessarily entail, ultimately , the public 
ownership of the capital utilized and the complete removal 
of the service from all influence by the barterers. There- 
fore the latter is stated first, as a cause; the former last, 
as an incidental result.^^ 

9 To prove that the sinking-fund payments needed to cancel all such 
capitalization, even including the artificial inflation, in twenty years, say, 
are far below the interest, dividends, net profit and barter-cost now charged 
up to the consumer instead, is a simple problem in bookkeeping which any 
business-man may solve for himself as applied to any service for which he 
happens to possess the necessary data. 

^^ As a matter of programme of procedure, the writer takes no dogmatic 
stand upon this point. He welcomes all recommendations looking toward 
public ownership as incidental aids. But a scientific statement of the argu- 



FUTURE PROGRESS WITHOUT POVERTY 553 

As the progress of such a policy gradually absorbed 
the capital of the country out of and away from capitaliza- 
tion, the latter would accumulate upon the capitalists' 
hands; not so rapidly as now, because their income would 
be gradually shut off at the same time. This accumula- 
tion of exiled capitalization will at first seek outlet In the 
direction of the control of new Inventions, the staple 
commodities being naturally the first to leave the profit- 
seeking field. This will give renewed zest to inventive 
ability. But if the policy of public absorption of private 
enterprise be properly forwarded it will gradually catch 
up with the creation of new enterprises and the capitalist 
will see his field for exploitation gradually narrowing. 
In consequence, interest-rates must steadily fall; until, in 
the end, all possibility of further capitalization being 
gone, by the new policy's having caught up with the pro- 
gress of the times, the standard rate of interest will be 
zero. 

Assuming that the people had not first been driven, by 
the extortions of the barterers, into the desperation which 
leads to confiscation, as was the case with slavery, the 
capitalist would still possess the full amount of his original 

ment cannot be correct unless it places the condemnation of profit-seeking 
in the place of first importance and the advocacy of public ownership in 
the second. The outcome in practical politics will uphold this position. 
Public ownership adopted merely as a business measure, to procure lower 
prices, or because private control of the service has become intolerable, 
will succeed in what it aims at. It has uniformly done so. But it will 
utterly fail of accomplishing what it legitimately , may when incorporated 
as a national policy, the alleviation of all community-misery, unless it is 
consciously and deliberately aimed at the elimination from the body-politic 
of all barter and the identification of cost and selling-price. Many citizens 
who occasionally uphold the public ownership of the lighting or street- 
railway services spend the bulk of their time and strength in that profit- 
seeking over the supply of coal, paving-stones, telephone or banking 
facilities, etc., which corrupts our government and reduces the gains due 
to accomplished public ownership to a minimum, — a pitiful one step for- 
wards and three backwards in the interests of the community. 



554 THE COST OF COMPETITION 

capitalization. He could keep it or he could spend it, 
as he chose; but he could spend It only once; he could 
draw no Interest upon It so as to be able to re-spend it 
over and over again Indefinitely. 

As to the elimination from the selling-price of the 
items of Division II, other than interest and rent, by the 
public fixation of all prices, that is practically automatic. 
It has been constantly shown how the entire aim and occu- 
pation of the barterers, who alone Inhabit what is known 
as the commercial world. Is the control of valuations: to 
the end that they may be exalted to the maximum. For 
to the barterers the era of prosperity Is the period of high 
prices. Therefore, if the community once sets out to 
enforce the fixity of all prices It removes the barterer's 
entire occupation. It amounts to a cancellation, although 
not necessarily a confiscation, of all purely commercial 
vested interests. ^^ 

The " legal control " of prices, as at present frequently 
advocated for a few industries, is not this same proposi- 
tion at all. For it still contemplates the sale of the com- 
modity at a margin above cost, at a net profit, which shall 
constitute the income of him who handles it; and this is 
plainly no true control at all. For it merely transfers 
the task of the control of the price, of the deception as 
to the true value of the commodity, as to the real cost 
of production and as to the actual margin of profit exist- 
ing thereover, from an appeal to a million of consumers 

11 As to this virtual cancellation of vested interests, in so far as they 
are devoted to barter, not production, herein will be found no faint pre- 
tense of advocating anything to the contrary, as appears so frequently in 
the politic propaganda of the single-tax school of social reform. As a 
matter of fact, the single-tax proposition virtually amounts to not only 
the cancellation, but the confiscation of all private land-valuation, to the 
abolition of all landlordism, just as this plan for fixity of prices does away 
with all capitalism and all barter. Indeed, either plan is ^worthless except 
in so far as it accomplishes just this result. 



FUTURE PROGRESS WITHOUT POVERTY 555 

to an address to a half-dozen public commissioners, — a 
very great gain in concentration of effort for the bar- 
gainers. It is true that the commissioners are supposed 
to be honest men, not open to corrupting influence; and 
here is not the least disposition to question their natural 
tendency to be so. But they are not supposed to be omnis- 
cient. No one can possibly know what is the real cost of 
production of an article except him who produces it — and 
those who appear before our public commissioners as repre- 
senting certain industries are not the true producers in 
that industry, nor their representatives; they are the bar- 
terers, or their representatives, and the prime weapon of 
barter is the concealment of the truth. Therefore, no 
public commissioners, however honest, can ever hope to 
truly protect the people from the making of profit out of 
them. Indeed, no public commissioners attempt it, or 
are expected to do so; for the making of a profit is not 
now regarded as a felony, as it should be. But no public 
commissioner may be expected to successfully protect 
the interests of his clients until he adopts that 
policy. 

Moreover, to admit in principle that every man is 
tempted to swell his income in every way possible; to 
assert that the value of a certain service to the community 
is limited and that it is the duty of the law to see that 
this limit is not exceeded; to then adopt the practice of 
permitting the director of a service to secure his income 
by forcing the selling-price as far as he can above the true 
value; to specify a legal limit thereto and to then hire a 
second ofiicial to see that the first exceeds it neither by 
force nor deception: all this is fearfully cumbrous and 
inefiicient. The plain way to accomplish what is desired 
is to publicly condemn all effort at making any profit what- 
ever; in the first place, by adopting the following fun- 



556 THE COST OF COMPETITION 

damental rules for guidance In the abolition of dis- 
sipation : 

( 1 ) The salaried superintendent of production must 
be the public commissioner for all decisions as to prices 
concerning the commodity he produces; 

(2) He must be the last one to handle any funds con- 
cerned In that production. 

(3) His own Income must be In the form of a salary, 
publicly declared and Invariable, except by public processes, 
having no direct dependence upon the momentary quantity 
of goods handled. 

The first two of these methods constitute exactly the 
present accepted pohcy in all efficient factory-organiza- 
tion of any size. The third Is the present accepted 
policy In dealing with all public men, and works effi- 
ciently. 

(i) The superintendent is paid a salary; no profit- 
seeking on his part would be tolerated for an Instant. 
He reports, from his foreman and to the Central Office, all 
cost-accounts, viz., the wages of each man, based upon 
(although not equal to) his actual productivity, as 
observed by his foreman; the cost of raw material; the 
cost of all incidentals, such as light, heat, power, etc. ^^ 

(2) The treasurer and the cashier's organization (all 
salaried), acting upon the data of this report, carry out 
the distribution of income, from the largest salary to 
the lowest wages. If the few higher officials who own 
stock and draw dividends be excepted, these Incomes are 
all predetermined according to productivity and are 
rigidly fixed, in comparison with the present frequent 

12 It is merely incidental that another oflficial, salaried and having no 
interest in the net profits, and in that sense a duplicate of the superintend- 
ent, adds to this list the items of rent, interest, advertising, etc., so as to 
place in the hands of the Central Office a complete report of the commer- 
cial cost of operation. 



FUTURE PROGRESS WITHOUT POVERTY 557 

fluctuations of the incomes drawn by the barterers and of 
the prices upon which they depend. The recipient may 
increase them, but only by currently producing to the 
organization an equal or a greater increment of value 
than his increment of income. 

Therefore, this plan which is advocated for systematic 
and legal adoption by the nation as a unit is exactly the 
one, including all considerations of individual psychology, 
which is now supremely operative over some eighty-six 
per cent, of the industrial population, all of those included 
under Division I. The sole fault in the results worked 
out by the system is that it is not carried far enough 
nor freely enough. The presence of barter restricts the 
activity of this eighty-six per cent, to some thirty per 
cent, of the nation's total industrial activity; the benefi- 
cent results of this fractional application of the policy 
cannot leak through the fourteen-per-cent. incrustation 
of barterers, to sustain society as a whole. 

It must also ever be remembered that for this eighty- 
six per cent, of the population this great change in our 
economic system will mean nothing at all except an 
increase in their purchasing-power and their choice of 
work, an opening up of life's general opportunities before 
them. They, the producers, now live and work under 
exactly the conditions prescribed in our remedy, except 
as to the volume and intensity of demand for labor. 
They now work upon raw material which is not theirs, 
with tools which are not theirs, to the production of a 
marketable result which is not theirs, for a rate of pay 
in the determination of which, or of its purchasing-power, 
they have practically no voice. Throughout the long 
hours of each week they have little sense of " mine " ; 
the preliminary programme and the final result are pre- 
scribed, merely a minor degree of method being theirs 



558 THE COST OF COMPETITION 

to choose and love; it is only on Saturday night that a 
yellow envelope Is " theirs," delivered with the word that 
it is presented to them by the capitalist and that they 
ought to be thankful that it is no less ! 

Remember, too, that these are the producers! These 
are they who make everything which we prize. These 
include the organizers of work, the designers, the inven- 
tors, the artists, the writers, the teachers and the 
preachers, as well as the mere artisans. Even if, in some 
of these cases, the yellow pay-envelope becomes a bit 
figurative, yet the life-aspect of the situation is not one 
whit different. 

Remember, further, that this proposed plan for the 
rational distribution of wealth constitutes, for the con- 
sumers, just such a Central Office as is relied upon in 
every factory for the exchange of intelligence between 
the diverse trades. In the factory the central office not 
only determines the rate and distributes the pay of each 
workman, but it decides, according to a simple balance 
of Supply and Demand, at what rate his raw material 
and his supplies must be charged against him. It deter- 
mines the number of hours which each department must 
operate, in order that the equilibrium of the entire estab- 
lishment may be maintained, and thus transmits to each 
workman a ready signal as to the world's demand for his 
particular sort of labor. It is this Central Office idea 
which we wish adopted upon a national scale of scope and 
authority, that in its dealings with each citizen it shall 
be responsible to the entire body of citizens, instead of, 
as now, merely to its several selfish selves. 

Indeed, it is only to the fourteen per cent, of barterers 
that we ask to have the aspect of life materially altered 
in kind, rather than in degree. That the change, dictated 
solely in economic terms, will be one calculated to much 



FUTURE PROGRESS WITHOUT POVERTY 559 

improve their mental attitude toward life, as well as to 
increases their productivity and their material enjoyment, 
it is sincerely believed. Yet the remedy will be of a sur- 
gical nature, demanding of them a renunciation of that 
which now is dearest to their hearts: barter. But our 
main argument, at present, is that the barterers are so 
much in the minority that their interests and their pref- 
erences cannot control, either to elevation or destruction, 
the destiny of the land. It is the prosperity of the 
greatest number which is our main concern. If we 
demand, to that end, a change which consists, essentially, 
of a mere removal of the brakes, — calling for no more 
motive power, as is now so continually being done by the 
discontented employers of the land, without specification 
of from what natural source it is to be expected, — but 
merely for a better chance for the action of what power 
we now have, certainly there ought to be little question as 
to the success of the plan. 

In short, it is proposed to take the factory-owner at 
his word and to follow his own example. We propose 
to organize all workers, over and under both, as the 
employees of the community, in the same manner as he 
now organizes ^' his " employees. For it must ever be 
remembered that, if the policy so frequently urged by 
commercial men in speaking of public affairs, viz.: that 
the people's government ought to follow the shining 
example of the business-world, ought to carry on its 
administration in a business-like way, — if this policy 
were once seriously adopted by the people, the immediate 
result would be that every harterer, every purely commer- 
cial man in the country, would find himself out of a job 
and without an income; for the entire country would then 
be organized upon the plan upon which he now runs the 
factory-production in which he takes no part, in which he 



56o THE COST OF COMPETITION 

permits not one Iota of individual profit-making, nor even 
of profit-seeking. 

The Growth to Be Released by the Abolition of 
Economic Dissipation. The result of adopting 
such a public policy is shown geometrically In Fig. 
25. Therein DD is the curve of aggregate demand of 
the community, covering all commodities. The AS-lines 
constitute a series of supply-curves, of which the upper- 
most one represents the state of supply at the time 
the new policy Is first put Into operation. Since this 
reformation amounts to the elimination of all the items 
entering Into the market-price from Division II, for 
all commodities, as the supply of each in turn becomes 
reorganized upon the new plan the curve of aggre- 
gate supply drops one notch downwards. When all 
commodities have been so treated the supply-curve, accord- 
ing to the data shown in Fig. 11, finds Itself In the lowest 
position illustrated, at a height above OE of thirty-four 
per cent, of Its original elevation (assuming that all other 
conditions remain unchanged In the meanwhile). The 
effect of these successive drops In mean price is Immedi- 
ately visible In the increased extent of trading In the mar- 
ket, which moves out from e^nii to ^2^2; ^^^ thus on to 
e^m^, in consequence. It Is to be noted how each succes- 
sive equal drop In the scale of prices results In a rapidly 
increasing jump in volume of exchange. But it Is quite 
Impossible to convey graphically the true expansion of 
trade to be expected from the drop In prices which would 
result from the abolition of competition, because the 
market Is at present in a lower, more stable position than 
m^ ; to portray It In Its true position and then show a drop 
of prices to one-third of the present standards would result 
in a movement of the e^n lines so far to the right as to defy 
good portraiture. Either an enormous diagram must be 



FUTURE PROGRESS WITHOUT POVERTY 561 

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562 THE COST OF COMPETITION 

used or else a scale so small as to cramp matters into 
mvlsiblllty. 

The result of such a reorganization upon the country's 
volume of production, exchange and consumption, there- 
fore, cannot be immediately expressed or comprehended 
In ordinary language. Just what increase In extent of pro- 
duction and exchange corresponds to a reduction of 
seventy per cent, (or more, if the step be taken not Imme- 
diately) In average prices to the consumer. Is not now 
known. The only thing certain Is that it would be enor- 
mous. It would be very much more than unity divided 
by 0.30, or over two hundred per cent. It must be several 
times that, probably to seven to ten times as great as now. 
Nor Is this tremendous prediction based at all upon the 
now supposititious but then inevitable Increase In efficiency 
of the Individual workman, based upon better demand 
for labor, better wages and higher standards of living; 
nor upon that of the productive establishments, based 
upon true consolidation, unification and a larger scale of 
production. Each of these, as Mr. Kipling would say, 
Is another story. It Is based solely upon the supposition 
that the energy and talent, the best of the country, which 
Is now devoted to the dissipation of wealth, be diverted 
therefrom into productive channels. 

It is entirely Impossible either to Imagine or to convey 
any adequate comprehension of what this means. Per- 
haps, by looking back to the time when the total volume 
of goods produced was only from one-seventh to one- 
tenth of what It Is now, which is not so very long ago 
(about 1850), and contrasting with present standards 
the social and Industrial conditions and conceptions then 
rife, some idea of the tremendous changes in our national 
life now imminent may be obtained; but only a very vague 
and unsatisfactory one. For whereas the last fifty years 



FUTURE PROGRESS WITHOUT POVERTY 563 

have witnessed, incidentally to the expansion In produc- 
tion of wealth, a concrete change In social ethics only in 
the abolition of slavery, affecting chiefly a minor race, the 
next half-century Is to witness a complete revolution In all 
civic science and ethical formulae, vitally affecting the atti- 
tude of every citizen toward the body politic. 

Nevertheless, the comparison of the primitive com- 
munities of 1850, lacking telegraphic communication, 
telephones, electric lights, trolley-cars, elevators and 
even, to all practical purposes as we know them now, rail- 
roads ^^ and bath-rooms, the Mississippi River being the 
western boundary of accomplished civilization, with the 
size, the form and the speed of modern community-life, 
gives contrast enough. Let it be remembered that the 
bulk of the changes since then have been the result of 
purely material forces: not only those of mechanical 
ingenuity, but those of the economic management thereof, 
of consolidation, of organization, of unity of direction 
and of harmony of interests, — in so far, at least, as con- 
cerns the barons of barter whose colossal incomes have 
constituted the seal with which the past half-century's 
growth has been stamped into symbol and significance. 
Then will it appear possibly true that, compared with the 
changes in our social life and ideals (in outward material 
aspect as well as in inward essence), which will be 
inaugurated by the elimination of barter alone, all these 
which we and our fathers have seen are but as child's 
play. For the present it is enough to have proven that 
the purely industrial " boom " which will result from all 
cessation of this present search after " business," of try- 
ing to induce people to buy who need no Inducement, who 

13 It was then a long day's task, and a very fatiguing one, with from 
three to seven changes of cars, to travel by rail from New York to Boston. 
Now five hours in parlor-cars and " diners " suffices. 



564 THE COST OF COMPETITION 

are overanxious to buy, of trying to increase the volume 
of trade by restraining one's every neighbor from trade, 
of trying to swell the volume of trade by increasing prices, 
— in short, the expansion of production, exchange and 
consumption which will result from all cessation of bus- 
iness, — will be incomparably greater than any ever yet 
recorded in the history of commerce, past or present. 

If the truth of these statements is not upheld by the 
analysis which has preceded them, then no amount of 
vague argument can avail to that end. Can anyone fail 
to believe in the coming of the change? Can anyone re- 
gard it as distant? Look at Fig. 12 (page 255), at the 
rate at which economic dissipation is coming to absorb 
practically all of our industrial energies, leaving daily less 
and less for production ! Can the equilibrium be regarded 
as stable, even now, with a seventy-ton cap-stone supported 
upon a thirty-ton foundation? Does it seem firm, as you 
look at it, this social structure of ours; or is it not already 
visibly toppling, — not swaying bodily, as a unit, but ob- 
viously crumbling and cracking away from solidarity at 
every point of contact between man and man? 

Or do you see now any sign of lessened speed of com- 
mercialization, as the years pass by? Is it not rather 
going faster and faster now than at any time in the last 
half-century? How long will it take, at the rate of 
growth plainly indicated, for this present seventy-to-thirty 
top-heaviness to become a case of ninety-to-ten, say; hope- 
lessly unstable, its center of gravity far outside the middle 
third of the supporting classes, and to come crashing down 
in social revolution? Let those who choose try to count the 
years, or to discount them ! Our fate is plainly imminent; 
near enough at hand, at any rate, to satisfy those who have 
been waiting long and earnestly for the coming of the Lord. 



FUTURE PROGRESS WITHOUT POVERTY 565 

Yet more needs to be said to show clearly the connection 
between the economic analysis and our conclusions. 
Given, for Instance, the adoption by the people of the 
plan just outlined and it cannot be shown that the most 
universal selfishness or lack of altruistic principle In 
human nature could operate to Its negation. The possi- 
bilities for the abstraction of wealth from him who pro- 
duces it, either directly or indirectly, reduce to a single 
line of opportunity: pure peculation. Of this we have 
plenty now: defalcation, embezzlement, swindling, bur- 
glary, robbery and petty thievery. In spite of the fact that 
the laws of the land declare against it. But in regard to 
It three distinct, fundamental things must be said before 
other questions regarding it can be considered: 

( 1 ) Its total volume of abstracted wealth is but a drop 
In the bucket compared with that regularly and legally 
taken from the community by Economic Dissipation; 

(2) All of it which is classed under the heads of public 
corruption, defalcation and swindling Is but one form of 
barter: the securing of wealth by cunning rather than by 
production, the persuasion of some weak cat's-paw to pull 
the chestnuts out of the fire. When public opinion and 
the law condemn the commercial forms of barter as well 
as the criminal forms, they will for the first time really 
discountenance the latter. 

(3) All of it, whether classed under Paragraph 2 or 
otherwise, Is instigated by a pressure of the needs of life 
against conscientious scruples, in the face of lack of oppor- 
tunity, which is due wholly to the presence of barter and 
which will disappear when barter becomes illegal. 

The truth of these statements is not now generally 
admitted. It Is in this sense true that we do not, as a com- 
munity-civilization, condemn peculation. We draw 
between the criminal actions of the hired cashier who 



566 THE COST OF COMPETITION 

embezzles at the counter and the equally parasitical but 
publicly lauded actions of the hiring financier behind him, 
a distinction too fine for either the consciences of the ignor- 
ant and the tempted, or the intelligence of the analyzing 
sociologist, to gain any true guidance therefrom. There- 
fore we have to-day an enormously larger amount of 
peculation current than would be when both law and public 
opinion condemn all artificial fluctuation of valuations. 

In this attitude public opinion Is roughly just to the 
individual, although unjust to itself. Society, having once 
told the business-man that profit-seeking is all right, that 
the sole way to secure an income Is to get everything in 
sight, no fundamentally wrong principle being recognized 
therein, should be neither surprised nor shocked if the 
rest follows Inevitably. Governmental corruption is as 
naturally a part of the plan as is poverty and prostitution. 
Only, the blame having been removed from the shoulders 
of the tempter to those of society, as the true originator. 
It ought likewise to be lifted from the tempted. The 
anarchy, the no-law, no guiding-principle, which we have 
made the basis of our economic system should be incor- 
porated into our criminal law also, if we are to be con- 
sistent, and all punishment for pecuniary crime be abol- 
ished. Indeed, the inevitable tendency in that direction 
has already been noted, as an actual fact of the present 
day. But to accept that fact without protest made effec- 
tive in reform is philosophical and practical anarchy; with 
which, indeed, every man who upholds the settlement of 
prices by the duello of competition more or less uncon- 
sciously allies himself. It is the only rational and stable 
abiding-place for one who fails to see the criminality of 
all profit-seeking, outside as well as within the govern- 
ment, and to urge its expurgation from our legal organiza- 
tion of society. 



FUTURE PROGRESS WITHOUT POVERTY 567 

The Effect of the Abolition of Barter upon 
the Individual. Accepting, then, the abolition of 
barter and capitalism as feasible at will, what will 
be the economic results perceptible in the life of each 
citizen? 

First and foremost, the enormous expansion of the 
volume of trade per capita will inaugurate a tremendously 
increased demand for productive labor, including, of 
course, the arts and professions. While the return of the 
energy and talent now absorbed in Dissipation back to 
production will increase the natural aggregate produc- 
tivity of the community, as measured in present standards, 
by some threefold, the extent of demand will increase by 
some seven to tenfold. For the first time in economic 
history the demand for labor will really exceed the supply. 
Wages, including the salaries and fees of the professions, 
will expand until they absorb the entire production of the 
community; interest, rent, dividends, barter-cost and pro- 
fits will take nothing. 

The alteration in the position of the producer relatively 
to the rest of society which will result from such a change 
is imaginable rather than definable. To-day he is a beggar 
for a chance to labor; " capital " is regarded as " giving " 
him employment. Being a beggar, he is not to be a 
chooser. Humility and gratitude are assumed to be his 
natural moral attitudes. He is a slave to circumstance 
or institution, if not to man. Nor is any opportunity lost 
for making him remember it : for when he does he meekly 
accepts a still lower wage. 

The reversal of this situation, the " boom " in growth 
of self-respect, self-confidence and power which will swell 
within him when the demand for labor really exceeds, in 
every sense, the possible supply, belongs more to the 
ethical than to the economic half of the argument. But 



568 THE COST OF COMPETITION 

In picturing future evolution It Is very difficult to dis- 
tinguish longer between the two. The economic side of 
life is going to drop so completely out of sight as a con- 
trolling factor, In anything like the Insistent prominence 
which It maintains at present. With the aggregate pur- 
chasing-power swollen to three times Its present volume, 
and for the Individual producer much more than that; 
with every man, down to the veriest laborer, choosing 
between as many urgent calls for his efforts as there are 
now of applicants for a single job, the supreme master 
of his own destiny, unfolding his growth In Intelligence, 
ability and taste to the limit of his physiological birth- 
right; with the supply of the necessaries and the material 
luxuries of life become a morning's chore, disposed of in 
a few hours, a wholesome preface merely to the real day's 
work, then become quite super-economic; with the needs 
and pleasures of life no longer gauged according to the 
vain fashions of an arbitrary upper class or to the com- 
parative acquisitions of one's neighbor, but become based 
upon natural tastes and desires — with all these things 
become the premises of our predictions, the unseen foun- 
dations of the later growth, what Is to be predicted Is no 
longer economics. It will be scientific, artistic or moral 
progress. The economies of production, then under 
unified control over the entire land, will have been refined 
beyond the present possibilities of the Imagination, as the 
natural result of perfectly free and justly paid emulation; 
but the problems which It currently raises will have taken 
on a purely scientific aspect, no longer to be included under 
the word economics as we now understand It. Economics 
now means both production and the open question of get- 
ting one's pay for It, a tread-mill for the many, a gaming- 
table for the few. Production will then have become a 
pure science, largely an art, and the pay for It will be 



FUTURE PROGRESS WITHOUT POVERTY 569 

unconscious of measurement, although much more accu- 
rately measured than now. Economics now means poverty 
and riches; there will then be neither, In their present 
sense. All will have the riches of comfort, competency 
and insurance; none will have the riches of wanton, 
unearned luxury. All will have the poverty of human 
weakness in the face of fate, the unending pathos of life, 
that poverty of spirit which we hope to " have always 
with us, that we may do for It what we may." None will 
have that poverty of opportunity which means penury 
coupled with either revolt or Impassivity. Economics 
now means the questions as to the distribution of wealth; 
that will then be in God's hands, the material foods of 
life then apportioned by man according as He has allotted 
to each his gifts: of strength, of Intelligence and of virtue, 
each Its own reward. And if the spirit should prompt 
something further than that, the allotment to those who 
lack strength or Intelligence of some extra material aid 
to the acquirement thereof, as we do now to the sick and the 
little ones, as an effort at compensation for their lack of 
better enjoyment, or if it be done even as thriftily profit- 
able to the welfare of the state, why that too, thank 
Heaven, is no longer tedious economics, but divinity pro- 
claiming Itself at home In man. ^ 

As for the rest of economics, the buying In the cheapest 
market and the selling In the dearest, with all which that 
means, that too will have vanished forever. Corpora- 
tions, soulless and mortal, worthy of oblivion, will have 
attained their natural end; succumbing to apoplexy or 
the gout, they will have crumbled into dust. The agents 
and the promoters, the commercial travelers and the walk- 
ing-delegates, the sandwich-men and the curbstone ped- 
dlers, all of them poor Wandering Jews of modern stamp, 
awaiting not hopelessly His coming again in modern, 



570 THE COST OF COMPETITION 

economic guise, knowing no homes but hotels and sleep- 
ing-cars, shop-counters and cheap lodgings, no religion 
but profit, no craft but cunning, — will all have found that 
Christ has Indeed returned to earth and will have lain 
down to rest forever. The presidents and the treasurers 
and the financiers, of this corporation and that, the 
brokers of their securities, now no longer traded on 
'Change, themselves no longer the field marshals of the 
war over valuations, general officers of a valiant army of 
drummers, lawyers, clerks and weary women-stenog- 
raphers, armed all with paper weapons, arrayed In the 
majesty of a gilded puppet-law, — will have stolen away 
to lead a new life: the organizers now of real productive 
Industry, true superintendents of the creation of Value, 
guiding minds to a work which Is become at once an art 
and a pastime, a pleasure If yet a duty, a profit to them- 
selves because a profit to all. Strife will then have given 
way to peace, organized Individual pride to progress, 
private profits to patriotism and to preferment in public 
service, enforced antagonism to invited co-operation. 
There will then be no more frantic advertising. The bare 
bulletins of occasional novelties will be Issiied by the true 
superintendents who manufacture them, bulletins as Im- 
partial as are now the weather-reports, and naturally more 
accurate. 

There will then be no more spies, no emissaries, no 
lawyers, no commercial travelers to organize or direct 
for the enticement of trade. The people will come to buy 
what they want, and when they no longer want a com- 
modity no one will be tempted to Induce them to buy It; 
its manufacture will be discontinued, to no one's loss. 
There will be no more undercutting of competitors, no 
more depreciation of the other fellow's securities, — there 
being no securities owned by any fellow, — no more ^' slic- 




Grant's Tomb and the Hudson River 

'' Let us have Peace ! " 



FUTURE PROGRESS WITHOUT POVERTY 571 

ing up the back." No more franchises will be for sale. 
No more railroad rebates will be inviting court. No more 
supplies of raw material will need to be corralled and 
monopolized, no more labor-unions to be combined 
against. Over the windows of the Profit-seeker's offices 
will grow the cobwebs of neglect and into his heart will 
slowly steal the conviction that for his life-avocation the 
advancing world has found no further use. With the 
declaration of peace his Intensity of self-defense will 
soften Into more generous sympathy with those in other 
walks of life; his bitterness, born of antagonistic Inter- 
ests, will heal Into unconsciousness; the cynic or the 
skinflint will melt into a scientist, an artist or a philan- 
thropist. 

To him who regards the present feverish activities of 
the commercial offices of the congested cities as the soul 
and symbol of modern Industry, all material prosperity 
will seem. In this picture, to have departed from the land 
and lethargy and decay to have set In. The grass will 
gather, be cultivated even, in lower Broadway, and Wall 
Street will be as quiet as on a Sabbath morning. Central 
Park will have grown to coalesce with the Battery, Man- 
hattan become one vast public garden, dotted only here 
and there with the buildings housing the people's centers 
of administration, expressing the dignity and sturdy seren- 
ity of their united Interests as does now the Capitol at 
Washington. The waters will run still, but they will 
run deep; no "business" will be done, but the people 
will be fed and sheltered and amused and inspired as 
never before in the history of the world. For In tele- 
phonic communication with these quiet centers of adminis- 
trative Intelligence will be the real productive centers : the 
factory-districts, now seeking more spacious territory than 
the narrow rocky Island, the mines and the agrlcul- 



572 THE COST OF COMPETITION 

tural regions. There will a very different prospect present 
itself: Activity unmeasurable, in present units at least, 
urged along by a steady, sturdy vigor of emulation barely 
suggested by our present fever of frantic competition: 
Production upon an enormous scale, with supreme effi- 
ciency, all those who are now hindering then aiding in the 
work, so that by noon or after a half-week, in effect at 
least, all is shut down: Invention at a rate of which 
our present congested Patent Office can be but a bare sug- 
gestion : Design of a beauty now unimaginable, the fruit 
of a nation's first free expression of free-grown taste, no 
longer stunted and poisoned by hired demand for preten- 
sion and pretense, by money earnable by the devising of 
sheet-iron architecture, Brooklyn-made " oriental " rugs 
and artificial palms, by men starved Into readiness to do 
the most hideous things, — a taste no longer forced, in 
lack of any national unit-life pressing for expression, to 
borrow both ideals and themes from the phallic votarlsts 
of ancient Greece. Of noise and hurry and surplus trans- 
portation there will be none at all: at each factory the 
nation's store of that particular produce; near each city, 
but not in it, accessible to transport, a warehouse stored 
with the city's needs; in each ward or precinct a retail 
bazaar, a World's Fair in miniature, a modern depart- 
ment-store swelled like a popcorn, for supply of and In 
touch with Individual needs. From these finger-tip per- 
ceptions of popular demand will go back to the local ware- 
houses the requisitions for supply, no longer irregular, 
hesitating, spasmodic, based upon hopes of profit or fears 
of loss, varying with every fluctuation of the market, with 
every waver of capitalistic cowardice, but as steady as 
human needs, as strong as human hunger. From the city- 
warehouses, the nerve-centers, the requisitions will be 
passed on to the factories themselves, becoming impulses 



FUTURE PROGRESS WITHOUT POVERTY 573 

to production still greater and more forceful, the inte- 
grations of such a myriad of local impressions, normally 
averaging the same. Thus will they reach the factory- 
stocks, themselves elastic and resilient, and result in pro- 
ductive activities still more steady and forceful: in single 
shipments of maximum quantities of goods, at most per- 
fect periodicity, with the utmost directness of aim toward 
the consumer, with no unnecessary transhipments: as 
fruit, for instance. Is now sent, since the cooperative 
organization of its market-Intelligence: wheat being no 
longer rehandled ten times and sold and resold seventy 
times between the farmer and the seaboard, with what 
additional unnecessary complications before the finished 
bread passes the laborer's lips no man may hazard. 

Of such productive industry as that there will be, in 
amount, everything which unstimulated, unvitiated human 
appetite can desire. Of conscious worry, care and over- 
work, In the fear for one's daily bread, there will be noth- 
ing at all. In its Industrial aspect civilization will have 
reached the serenity of a strong middle age, the prime of 
life, the storm and stress of feudal barter relegated to the 
medieval nineteenth century and forgotten, the heritage 
of a dead past burled In that past. Man will have break- 
fasted upon the fruit of his industrial evolution. With 
that digested and forgotten he may first rise, in his divine 
strength, as a lion from its lair, for the true day's work 
before him: the unhampered conquest, by might of intel- 
lect and of faith coordinated and cooperative over an 
entire continent, of the natural obstacles of life : the unend- 
ing interrogation of Nature in science, art and philosophy. 

This is the duty and the destiny of man. Until he 
ceases his quarrel with himself and undertakes It he shall 
find no peace: social ulcerations shall afflict him to his 
distraction. To clear his hands to Its undertaking, to ful- 



574 THE COST OF COMPETITION 

fill the devoir which divinity and humanity have alike 
laid upon his shoulders, calls for the same simple formula 
which ended the quest for the Holy Grail: the giving of 
food to the hungry and of ourselves to the oppressed, In 
our united address to a single task: the national suppres- 
sion of private profit-seeking, of the fluctuation of prices 
for the weak by the strong. 

This is the Standard which this youngest world-power 
of which we are a part, the leader of the empires In youth- 
ful vigor and humane self-restraint, should be proud to 
raise before the present day and generation, to which will 
flock the Wise and the Honest from the uttermost corners 
of the earth, to the end that our national justice may be 
upheld and the human race furthered toward Its final 
goal. Let once the banner be but displayed, and over the 
result need no man worry. The deed will be done in the 
love of man for man. " The event will he in the hands 
of God." 



VIII 
ETHICAL SYNTHESIS 

"THE HERETIC." 1 

" I love the Lord ; I love my fellow-man ; 

Christ the gentle I adore. 
And my soul's lowest whisper moves me more 

Than hell or fears of dogma can. 
What creed, then, or what church shall hmder me, 

What power presumptuous place me under ban, 
With love to God and love to man 

And eager eyes on Christ of Galilee ? " 

IN the preceding discussion It has been pointed out, at 
each step in the argument, that the defects visible 
in society as it exists were in the greater part due to 
the presence of a single false institution. It was also 
incidentally to be inferred, from each step, that if this 
institution were removed the defect would disappear. 
This concluson is the summum honum of any such an 

argument. . . 

It is not possible to proceed further constructively and 
to say just what form of ethical growth will take place 
when the brakes are removed. We know too little about 
the great constructive force of growth; we know it only 
by its limitations. Nevertheless, it were well to inquire 
a little further as to what more general conclusions we 
are justified in claiming. Taking for granted the accuracy 
of all that has preceded, what light does it throw upon 
the ethical development of the race? What part of its 

1 William J. Long, in The Outlook. 
575 



576 THE COST OF COMPETITION 

present general aspect Is owing to competitive action? 
What additional growth may be expected from the sub- 
stitution of a complete system of cooperation? 

In perusing the preceding pages the impression may 
have been gathered that the conclusions properly to be 
drawn were woefully pessimistic. The evils of society 
were pictured as distinctly as the ability of the writer 
would permit. Every effort, indeed, was made to convey, 
In the brief generalizations permissible, a strong sense of 
how dark our present civilization is on its dark side. 

This does not imply, however, that the dark side is the 
only one, nor even the major one. But It does Imply that 
there lies plainly at our hands, in the near future, the 
unpleasant task of a national house-cleaning, a political 
reorganization of a sanitary sort, removing gathering 
cesspools of waste and corruption and the more obscure 
origins of their infection, — In which work any glossing 
over or concealment of taint Is the worst hindrance 
possible. 

Bitter criticism will be aroused by the stand just taken, 
that the warfare of commercialism Is irremediable except 
by the legal declaration of peace. It was stated that, 
since the combat is already on. Is protected by law and Is 
supported in principle by the great majority of citizens, 
it were better waged as fiercely and expeditiously as pos- 
sible to its only possible end: Its outlawry by statute, by 
constitution and by public opinion. In this way, and this 
alone, lies peace. Because of this it will be misstated that 
this argument favors strife. But it is those who clamor 
for immediate peace, regardless of unsettled casus belli, 
on the other hand, who are under responsibility to show 
that crying " Peace, peace ! " will bring peace when there 
is no peace; that it will not, rather, bring more war: 
underhanded, desultory, indecisive, interminable war, 



ETHICAL SYNTHESIS 577 

most profitless of all effort^ instead of good, sharp, deci- 
sive onslaught. 

To him, then, who has read more than the mere typog- 
raphy of the preceding pages, all this must have been 
obvious: that there lay back of them a firm faith that a 
wholesome evolution is ever In progress, that things have 
never been so well as now and will always be better In the 
future; that only In a single direction does cause for 
uneasiness lie. In that direction exists a downward cur- 
rent in the otherwise rising tide of human affairs. There 
the growth of a tumor upon the otherwise wholesome and 
vigorous body politic calls for prompt and thorough sur- 
gery ; but the constitutional vigor of that body politic as a 
whole was never better. 

Yet this optimism should properly be expressed more 
exactly. This is an age Impatient of Irrldescent dreams: 
calling for accuracy and practicable details Instead. 
Therefore the attention is called to these following 
definite ethical propositions as corollaries to what has 
preceded. 

Let it first be recognized that the evolution of society 
does not follow the direction indicated by the conscious 
effort of its individual members. It was not conscious 
Intention and effort on the part of the mid-European bar- 
barians to supersede the Roman with a Western civiliza- 
tion which led to that result; they were merely after 
plunder. It was not effort looking toward the independ- 
ence of the American colonies from British domination 
which accomplished that fact; it was merely a stand for 
minor rights such as we all fight for almost daily. It was 
not concrete, conscious striving after the abolition of 
slavery which attained It ; it was not a deliberate plan for 
American expansion into the Pacific islands which brought 



578 THE COST OF COMPETITION 

that to pass. In each case a few wise heads foresaw the 
ultimate result; but it was not they who planned or 
executed; they merely predicted, Cassandra-like, in the 
face of contempt and disregard. The people who did 
plan and execute, officially and in the ranks, were at the 
time trying to do something else. The list of illustra- 
tions from history may be expanded as you will; they will 
all corroborate one another. 

Therefore it is also plain, if there be any parallelism 
In human cause and effect, that men are not to be brought 
to be good and happy by directly trying to be good and 
happy. Those who try to make others happy always 
succeed. They make them, many more of them than they 
had hoped, both good and happy; but by totally different 
ways and means than they had planned. The most futile 
of all follies is to try to make one's self good by puritanical 
effort, or to hope to persuade or Induce others to do the 
same. The entire history of mankind stands In support 
of this. The reaction of the present century against 
Puritanism Is its current expression. 

Let it next be recognized that history records no growth 
of human character In quality. Growth of some sort, of 
course, there has been, continuously. But there is no sign 
that the elevation of the Individual human character has 
undergone any permanent enhancement with the passage 
of the centuries. In the early periods of English history. 
In the earlier Continental barbarians. In the first stages of 
any of the previous Mediterranean civilizations; in the 
seml-civiiizations of the Aztec and the Oriental races; 
in the savage tribes of North American red men; even In 
the higher orders of lower animals: the peaceful horse 
or dog or elephant or the fierce, carnivorous lion, — in 
any of these layers of life the more prominent Individuals 
are marked by characteristics which we spontaneously 



ETHICAL SYNTHESIS 579 

and unqualifiedly call noble. King Alfred or Bishop 
Anselm we are forced to place upon a perfect par with 
Abraham Lincoln or Phillips Brooks. Nobility of char- 
acter, the only touchstone by which can be identified the 
highest development of life into true naturalness, is 
entirely independent of accumulation of intellectual attain- 
ments, of degree of development of industrial efficiency, 
of absence of bloodshed, or of refinement of aesthetic 
sense. 

There have been ups and downs, of course, in the his- 
tory of character. If one should compare the average 
Italian of the sixteenth century with the average Anglo- 
Saxon of to-day the inference must be that there has been 
enormous progress. Then all was luxury, self-indulgence, 
worldly ambition, intrigue, faithlessness and dishonor; 
assassination and sexual incontinence were the two most 
prominent social institutions. But It was not always so 
with this place or race. Go far enough back In the his- 
tory of Rome and we find the national character as high. 
If not higher, than Is our own to-day. Simplicity, earnest- 
ness. Industry, generosity and the highest Ideals of duty 
and honor one may draw from their records. 

So It Is with our own race : If we follow back the history 
of our forefathers to the days of Bede and of Chaucer, if 
we wash ofli the blood and the mud of a rough and primi- 
tive age, In close contact with the problems of animal 
existence, vigorous and violent, we find beneath it the 
utmost purity and elevation of character. Then gen- 
erosity and chivalry, loyalty and honor, moral courage 
as well as physical, and a high faith in the invisible, stood 
out In clear bold lines. No cowardly creed of accu- 
mulated rules of conduct overspread and dimmed the 
hard outlines of grim-vlsaged duty; no intricacy of social 
organization veiled the plain responsibilities of the Indi- 



58o THE COST OF COMPETITION 

vidual to his fellows and to his God. Their ideas of cul- 
ture and refinement would hardly pass on Beacon Street 
to-day, but their standards of true manhood would be 
hard to match in New York or Washington. 

So widespread is the idea that growth, the universal 
avocation of all living things, includes growth of nobility 
of character that it is necessary to include this denial in 
the premises. 

Plain above all things is It, however, that something 
has grown. If not character, then what? 

Three things: (i) Numbers; (2) Institutions, or the 
method of association of these numbers; (3) Refine- 
ment. Taken collectively : Complexity of relationship. 

Of these three the basic one is Institutions. It Is in 
these alone that continuous evolution is visible. Upon 
the stage of their growth depends the advance In both 
Numbers and Refinement. 

We look back upon the fires of Smithfield with horror. 
Why do we regard them so differently from those of Mis- 
sissippi and Delaware? Then was associated with them 
the highest Ideals of faith, courage and constancy to duty 
which man has been able to attain: men and weak girls 
going praying, even singing, to the stake, sons encourag- 
ing fathers, and wives husbands, to be true to their ideals 
though the flesh be consumed in torture. What have we 
to-day to compare therewith? What do our charred and 
bloody stakes herald to the world? Weak, passionate, 
Ignorant self-indulgence on either hand: of lust originally, 
In the victim; then of cowardly fear when the retribution 
comes: of shameful vengeance, brutal malignity, rejoicing 
In every association with the work, on the part of the 
lynchers. Not one atom of nobility, of dignity, of exalta- 
tion in the entire proceeding ! 

Wherein can there here be found any sign of progress? 



ETHICAL SYNTHESIS 581 

Simply In that then the stake was a formulated, accepted 
institution of the land; now it is the remote and incidental 
fruit of an institution. Then Bloody Mary was en- 
throned; now there Is almost a price upon the head of 
Judge Lynch. 

It IS not at all the present purpose to launch into a 
development of this triple-headed outline. To do so were 
to undertake a volume on the evolution of the human race. 
But it is necessary, before anything can be said as to the 
effect of barter, or of the future lack of it, upon individual 
ethics, to point out these fundamental propositions con- 
cretely. They cannot possibly be understood and used 
constructively upon a mere bald statement of them such 
as the present one; but they can be formally eliminated 
thereby from our argument, by relegation to the premises. 
In these pages will be found nothing except what is con- 
sistent with them. If sympathy be expected In the fol- 
lowing argument with the vague, popularly prevalent idea 
of human evolution as a slow current. In which the indi- 
viduals of the race move side by side from a remote past 
of bestial and malignant ferocity, or true deviltry, to a 
roseate but remote future of pink cloudland inhabited by 
serene and benevolent (but quite idle) angels; if any 
encouragement is expected for the belief that In this cur- 
rent those who are ahead are those who started first or 
those who pressed forward most diligently and properly, 
— then let that hope be abandoned and the book closed. 
To such as feel in this way only the primers are open; 
their education In sociology has not yet begun. This Is 
neither a primer nor an album of iridescent dreams 
(although it will be called such). It Is a study In cause 
and effect. 

For Instance, I note, In an editorial in an able weekly 
sheet, the walking-delegate referred to as " in a barbaric 



582 THE COST OF COMPETITION 

condition which is simply one of the stages of progress 
from brutes to something better." Nothing could express 
the popular idea, among the people who worship profit- 
seeking, better than this. Here is this walking-delegate. 
He is one, it says (most charitably), because he has not 
yet learned better than to be one. Formerly he was some- 
thing worse: of that race of criminals, we must suppose, 
which is so rapidly and so obviously becoming extinct, — 
except in statistics. Perhaps he is descended from a real 
devil. Two centuries ago people, the best of people, 
believed in them : with hoofs and horns, with forked tail, 
blazing eye and a smell of sulphur. No doubt there were 
such things then, — for there must have been something 
far worse, according to this philosophy which I condemn, 
than anything we know now, — become extinct since by 
evolution into the higher forms of life : probably first into 
less malignant banshees and hoodoos ; then into plain crim- 
inals; then into walking-delegates, trades-union presidents 
and socialists; then (since these latter also are plainly 
becoming extinct) into good, submissive never-striking 
working-people (who are at the same time plainly upon 
the increase) ; finally to emerge at the top of the ladder, 
when the centuries have reached the end of the roll and the 
millennium shall have come, as captains of industry or of 
finance, or as brilliant corporation-lawyers. There and 
then shall appear the highest, the divine type of Perfect 
Man, golden-haloed, crowned with a wreath of coupons, 
symbol of triumph over evil; amidst most radiant sur- 
roundings: endless cloudland, vaporous with the accumu- 
lated moisture of past ages of toil, surcharged with prof- 
its, roseate with the eternal effulgence of endless dividends, 
— wrung from whom and resting upon what source of 
radiated energy not being yet explained or specified. 

O wonderful Golden Age! all dividends and director- 



ETHICAL SYNTHESIS 583 

ates, with grimy, repulsive, productive labor non-existent, 
not even needing to be kicked or cursed! Beautiful, iri- 
descent dream ! Alas, to think that it is an iridescent, a 
lurid dream, that it must be abandoned for a prosaic 
regard for cause and effect, for shackled subservience to 
natural law, such as of conservation of energy; for sub- 
mission to other laws, such as that of Form: that all life 
is molded. Inexorably, by Its environment into what it 
is, — into knight or villein, crusader or saracen, If the cen- 
tury be the twelfth, into pirate or puritan If It be the 
seventeenth. Into walking-delegate, promoter, captain of 
industry or other commercial creature if it be the twentieth, 
each hired to become what he is by the form of his own 
times, each bred and fed by some temporary institution, — 
the only alternative to existence, as any Individual may find 
it at any moment, being non-existence ! 

No, life is not a limpid current of progressive individ- 
ualism, flowing peacefully from spring to ocean, from 
muddy source to crystal destination. Life Is the tide from 
the unmeasured deep itself, rising, in obedience to forces 
we cannot comprehend, from original depths of pure 
unfathomable formlessness, to well over the virgin earth 
and to be molded thereby into things definable and meas- 
urable; to know for the first time Form and Progress, 
Up and Down, In and Out, Clean and Muddy. In that 
gross tide individual men are but the fluid atoms, striving 
each endlessly, but each yet borne on helplessly; each one 
Incompressible, elbowing the others, exerting his proper 
fluid-pressure outward, never for one Instant abandoning 
his activity In action and reaction; but nevertheless always 
fluidly balanced, ever in turbulent whirlpool-equilibrium; 
tossed upwards as another goes down, depressed as another 
rolls up over him; now at the top, rejoicing in the glisten 
of foam, in sunshine and rainbow-colors, tossing sport- 



584 THE COST OF COMPETITION 

Ively, boasting freedom and superiority, — but very light 
and volatile, possessing no real effectiveness, evaporated 
in the first warm wind; now at the bottom, in eternal 
gloom, under fearful pressure, supporting the rest thereby, 
moving only slowly, in long swells, in enormous volume, 
with irresistible energy, tossing the visible steamships far 
above with its invisible vigor, the seat and the store 
of all potentialities, but existing eternally in silence. 
Now life flows clear and pure in the central current, 
rejoicing in freedom from temptation; now it rolls soiled 
and turgid, crowded upon the muddy shore, squeezed into 
fetid inlets, absorbing sewage, doing the world's endless 
work of cleansing: which is done always by absorption, by 
living and by dying polluted and despised, for the sins of 
others. 

In all of this the environment which forms and guides 
and molds each mighty current, each struggling vortex, 
each tiny ripple, is the system of channels which it itself, in 
the ages of the past, has carved from the solid earth. In 
man these channels are his Institutions, chiseled in the past 
from the flinty foundations of existence, with many a weary 
blow, many a fiery spark, with unending combat; modified 
now by the reaction from each twist and turn they give 
him, but in the main shaping irresistibly the destiny of the 
race and of the individual. 

So like unto the rising tide, invading and overcoming the 
land, is man, as history reveals him : never twice alike, yet 
eternally the same; always, as an individual, cast back upon 
itself defeated; always, as a race, ultimately triumphant 
over the material obstacles which oppose and fret him; 
seething with currents ever, lashed by storms, progressing 
by waves, antagonistic, crest towering to meet crest, cav- 
ernous troughs intervening to maintain equilibrium : which 



ETHICAL SYNTHESIS 585 

last, since crests alone are desired, is so very hard to 
understand, so very reprehensible. 

In this vast sea of fluid-life, permeated with energy- 
transmissions and transformations, no form arises inex- 
plicably, without commensurate and irresistible cause. The 
primary guide to its understanding is the law of the con- 
servation of energy. Every college-graduate knows the 
letter of it. How many know the spirit of it? How many 
statesmen do ? The secondary guides are the further laws 
of energetics. They should constitute the fundament of 
every university-course in sociology. 

In lack of these the world's attitude toward human 
nature as visible In sociology is much as that of man toward 
ghostly manifestations: superstitious. Perceiving some- 
thing uncanny which he cannot understand, because he can- 
not identify the cause, he concludes : " That is a fearful 
ghost ! " He so reports It to the world, which shivers In 
response. So the ordinary thinker, the jumper-at-conclu- 
sions, the man most frequently heard and read, perceiving 
some untoward social phenomenon, some walking-dele- 
gate, some trades-unionism, some violence, some momen- 
tary lack of equilibrium in the social vortex, which he does 
not like but which he is too stupid or too lazy to explain, 
exclaims: "That Is natural depravity; that is original 
sin ! " and the complacent, self-sufficient world shudders 
in sympathy. Only once In long does the wee small voice 
arise and say: "That Is thine own handiwork. Into 
such turmoil have you stirred God's footstool." 

Quite different Is the attitude of him who believes in 
the law of the conservation of energy, knowing that noth- 
ing comes from nothing, that every form which arises 
before our eyes is forced Into existence by an original 
nucleus and a favorable environment. Perceiving the 
uncanny or the unpleasant, he says to himself: "That 



586 THE COST OF COMPETITION 

must have some explanation, some material, commensu- 
rate, previous cause, only by removing which can the 
unpleasantness be abated. Therefore, although I cannot 
yet identify the nature of the thing or its cause, will I 
remain in peace of mind. There are no ghosts." Per- 
ceiving the social perturbation he says, in similar strain: 
" Original sin? Nonsense! That is a child's subterfuge, 
a mere easy name for the real cause, offering nothing 
toward progress to a solution. There is no original sin, 
in the sense of a thing unknowable and Irremediable. 
There are wrong relations between men, — relations not 
chosen spontaneously, giving no evidence as to their 
human nature or their natural attitude toward one 
another, but assumed at the dictates of custom or law, — 
which produce friction, heat, distortion; which warp into 
walking-delegates or commercial travelers or " grafters " 
or promoters, men who would otherwise be useful citi- 
zens. When I can, I shall ascertain which relations are 
wrong and shall change them. Until then let me reserve 
my judgment and hold my peace." 

So now do we see, having approached the topic In this 
attitude of mind through chapters of previous analysis, 
that there is a quite visible commensurate cause for the 
greater part, if not for all, iniquity. For the rest we may 
reserve faith; but of this we are palpably, absolutely 
sure: 

That all want, the great hulk of all crime and an enor- 
mous proportion of all sin, sorrow and ugliness, are the 
inevitable fruit of a single artificial and irremediable, but 
destructible, institution: Barter. 

This Institution we have inherited from a brutal past, 
when It was originally useful. Into an age when its 
anachronism is the germ of all social disease; and the 



ETHICAL SYNTHESIS 587 

symptom of social disease is Individual sin. It Is the 
duty of the twentieth century to rid us of this burden. 
No pulpit, no missionary, no rostrum, no university-chair, 
no independent press, may boast of furthering secular aid 
to moral progress which does not aim Its work, more or 
less directly, to this ultimate goal. When it strikes in that 
direction It can be absolutely certain, for the first time, 
that it is decreasing the sum total of all sin and suffering 
in the world. 

This is rational optimism. Such would be true con- 
structive sociology. Hitherto has been only blind grop- 
ing, after facts, after accumulation of past accomplished 
facts; no adequate explanation of the past, no accurate 
prediction for the future, no guidance In doubt, no funda- 
mental faith, no universal principles. As preliminaries, 
all these facts are necessary, no doubt. But if their fruit 
Is to be only knowledge of what Is not, of nothingness, of 
doubt and skepticism, of conservation of all which we now 
have, whether good or bad, because of fear to take a step 
forward off the beaten path, — If It Is to breed only fear, 
paralysis and depression of spirits, — then it were better 
not to have been. 

Huxley says that if all which science might be expected 
to bring to us were its accumulation of material facts, if 
it had to offer no hopeful deductions, no broad principles 
of truth, extending far beyond our microscopic selves into 
the material Infinite, it were better for the human race, as 
well as for science, not to have been. If such were the 
ultimate achievement of the Baconian philosophy and Its 
resultant civilization, the race might better commit suicide 
at once. For its facts are terrible ones : recording chiefly 
struggle, disease, suffering and death. The population Is 
greater because of Its aid; the death-rate is less. But 



588 THE COST OF COMPETITION 

there seems not to be one atom of decrease in human 
suffering — of mind, at least, if there has been of body. 

If all that sociology has to lay at our feet is vast heaps 
of statistics; of births, deaths, dollars and crimes, lugu- 
brious Malthusian doctrines, brutal survivals of those most 
fit to bargain, — if it can find no hope, no certainty, of 
aught else or better, — then it, too, were better to pass 
away at once into interminable oblivion. 

If all that religion has to bring to us is exhortation, 
to fight on endlessly against the burden of an original sin 
to which we were condemned unborn, unsinning, if all it 
can give is the consolation of endurance in prayer, then 
also were the suicide of religion better. For the religious 
statistics, too, are depressing. Take each man away from 
his fellows, like a grain of sand separated from a pile, 
and what improvement does he show, on the average, after 
all these centuries of Christian influence? Do not the 
statistics show as much sin and crime as ever? Are not 
the missionaries more active than ever, abandoning 
Borrioboola-Ga until Mulberry Bend shall have been 
somewhat improved? Has there been any improvement 
in average rectitude or strength of character? 

To ask this question, most seriously, is not pessimism. 
Even to answer it negatively, as has been done here, is not 
pessimism. To be really pessimistic is to assume that 
these are the only lines in which progress is possible; for 
it takes little agument to show that along them there has 
been no visible progress in the past. True optimism is to 
show that this is true, but to also show that there are other 
lines in which progress is easy; that is, as easy as whole- 
some life ever is. 

What social progress man has made, aside from the 
accumulation of material knowledge, has been in the 
evolution of his institutions, in the development of his 



ETHICAL SYNTHESIS 589 

legal relations with his fellows, In the gradual substitu- 
tion of political and Industrial cooperation for mutual 
antagonism or Ignorance, whereby greater numbers have 
been enabled to live and be reasonably good, whereby his 
weaknesses and his vices, although ever present, have 
become less effective against his own and his neighbor's 
happiness, while his higher tendencies have become more 
and more effective toward peace and plenty. Men have 
been exhorting each other, In oration and sermon, to be 
unselfish ever since history began. But man has become 
unselfish, as the centuries rolled by, not In proportion to 
the amount or Intensity of exhortation applied, not by any 
alteration In the Internal physiognomy of the individual, 
but by and to the degree in which institutional environ- 
ment has permitted and Incited the unselfish to survive 
and to possess power and has condemned the selfish to 
extermination. 

There Is no more possibility of cure by prayer or 
exhortation In ethical delinquency than there Is in physical 
Illness; there Is no more Christian science in morals than 
In medicine. In each, faith and courage play a very 
important part, In the aid they lend to the one fighting 
for life ; but In each sort of fight, while praising God, one 
must keep one's powder dry. It Is the chief ofSce of this 
Second Part of the argument to supply this necessary 
factor of faith In sociological thought, to assure that cure 
Is possible. Is certain, — in the face of what seems an 
almost universal lack of any such faith among the most 
prominent In the land. Without it statistical facts are 
dead and useless — as useless as is surgical aid to a man who 
does not wish to live. 

Absorb, then, this faith : that If the hard-headed execu- 
tive people of the world will only adopt the lesson of this 
economic analysis, most cold-bloodedly even, and effec- 



590 THE COST OF COMPETITION 

tively abolish barter, the utmost in the way of ethical 
development possibly to be hoped for will inevitably 
result. Give all men bodily comfort and mental peace, — 
properly to be attained only by hard, earnest work of 
a useful kind, but to be thoroughly assured thereby, — 
freedom to work profitably, to marry deliberately, to 
choose, to study and to grow somewhat, in mind and body; 
to develop, in short, both muscle and intellect along 
natural, spontaneous lines; do this and you will unavoid- 
ably have produced in them the highest possible moral 
development. It is already too long that we have said 
to ourselves: " Go to; let us be cultured! " with a head- 
long plunge forthwith into Ruskin and the Mahabharata. 
We are beginning now to learn that it produces only self- 
consciousness and superciliousness. It is much too long 
that we have said to others : " Come, thou ! It is thy 
duty to regenerate and develop, to become appreciative 
and creative " ; with a helpful upward yank, when 
response seems slow, by the scruff of the neck; by means 
of missions, college-settlements, presented art-galleries; 
by boys' clubs which discourage fisticuffs and shop-girls' 
leagues offering no dancing, no young men, aged Sir 
Herbert and Sir Matthew being supplied instead; by all 
sorts of social porous plasters, poultices and hot baths 
applied externally and gratuitously to the body politic, — 
in place of moderate hours, good food and fresh air, 
instead of the self-respect which grows only from reliance 
upon self for support and for amusement and from pri- 
vacy of exercise of taste. For those who supply all these 
medications it is well, in lieu of some better God's-work. 
It takes them a bit out of themselves, albeit leaving a 
mighty taste of self-importance, of righteous beneficence, 
very far from true devotion, in the mouth. For those 
treated it also accomplishes something, chiefly in the way 



ETHICAL SYNTHESIS 591 

of distraction: a counter-irritant to their other ills. Of 
true, natural, wholesome, permanent development it 
brings not one atom to either party. 

Why not reverse the plan? Why not remove from the 
necks of these people the burdens which we ourselves 
have placed there, which are bending and breaking them 
until they need external support? Why not remove the 
pressure which grinds out all leisure for a more spon- 
taneous formation of mothers' clubs or for learning that 
they are unnecessary, all taste for spontaneous reading 
or seeing, all spare cash for the good things of life, all 
quiet wholesomeness of selection in even those things 
which are attainable? Why not let them live naturally, 
under what pressure against an unconquered natural 
environment the Lord has decided to be wholesome, pro- 
ducing only keen zest for Its conquest, — not under any 
artificial pressure whatever from their fellow-men,- — and 
see if life will not bud spontaneously, rapidly; a bit 
crudely, at first, perhaps, unabsorbed cotyledons being 
somewhat prominent yet, but turning with true instinct 
toward the sun and toward support for climbing; demand- 
ing libraries and art-galleries faster than we can supply 
them; leaving us no time for the issue of invitations, for 
the declaration of drafts, into the " volunteer " army of 
seekers after Culture; even pushing us soon for our 
supremacy in these matters, showing clearly that tumultu- 
ous crimson blood Is more creative than our thin blue 
stuff, that our universities and our canons of taste exclude, 
rather than breed, rising genius; that altogether there is 
a newer, higher order of things in store for the human 
race, to come out of the vigorous and the unlovely, than 
is dreamed of in all our pedantic, condescending philos- 
ophy? 

To sow the seed for all this is the office of economic 



592 THE COST OF COMPETITION 

analysis. Ethical development may arise only from 
economic forces. Accomplished ethics become valuable 
only in creating again economic results. Between butter- 
fly and butterfly must always intervene the worm. No 
like produces immediately like. No form of energy can 
create its own form: a double intermediate transforma- 
tion alone can bring back the old source into new product 
of a like but higher order. It is a fundamental law of all 
Form. The pendulum must always swing, swing, swing: 
from high to low, from low to high; from egg to swan, 
from swan to egg; from infantile barbarity to adult 
beauty, from the dignity of whitening hairs back headlong 
into childishness, decay and the travail of renaissance; 
from struggling conquest of a virgin land to affluence, 
leisure, science and art; from immortal schools of Olympic 
genius, recording generations of life, of experience, of 
strength and pathos in incorruptible monuments, back 
again into barbaric chaos, into medieval death and dark- 
ness: grim witnesses to a nation's death, repulsive inci- 
dents to a People's birth. 

"June, December; December, June! 
Hast thou, then, no other tune ? " 

Cannot the roses of summer cease to fade, can they 
never sow themselves from the blossom, in the air and 
sunshine, without recourse to dead seed and the cold, dark 
earth? Must the winter ever intervene between flower 
and flower? Can art never perpetuate itself as art, by 
artistic effort and inspiration, blooming perennially, 
accumulating ever? Is it really true that the study of 
the beautifully produced can never produce the beautiful? 
Is it relentless, this law that art is but the expression of 
life, coming always after life, as a fruitful blossom, strong 
as the life is strong, as beautiful, as fascinating, as seduc- 



ETHICAL SYNTHESIS 593 

tive as the strong life which bred it is repellant, hard and 
self-sacrificing? 

Is it, then, inexorably true that ethics never breed 
ethics, that high moral growth comes only after high 
material prosperity: not the fever of high prices and over- 
confidence now known by that name, but true prosperity 
for all individuals, of work enforced but not overstrained, 
of bodies fed and warmed but not gluttonized, of certain 
shelter from all human attack but not of pampered fear 
of all contact with the winds of Heaven? Are all ser- 
mons, exhortations and ideals really futile, then, except 
as they remind us to respect human liberty? 

Such is the law. Those things which we seek we must 
turn our backs upon. Not in romantic knight-errantry is 
rewarded the quest for the Holy Grail, but where the 
giver gives himself to the destitute and feeds the Three. 
Not in crusades against Jerusalem is found the Christ, 
but in homely daily tasks well done. 

" Hew the stone and you will find me. 
Cleave the wood, and there am I ! " 

Not In the schools and art-galleries is to be found the 
true creative genius. Every artist has had to flee them 
before he began to succeed, to learn even. The great 
builders of science and philosophy have ever risen over 
them, not by them. Only from reverent study of brute 
nature at first hand did genius ever arise: mighty, crea- 
tive, immortal. 

Further, this relentless law itself Is the sole foundation 
of the highest human development. The highest thing 
in man is faith. The seed of faith grows in temporary 
darkness. It is in the night that we learn to await the 
dawn, in January that we appreciate July, in storm that 
we are reminded that the sun always shines. 



594 THE COST OF COMPETITION 

Not that unlllumlned adversity is the sole food for 
growth. If unending light never breeds faith, unending 
darkness kills all hope. It Is neither In the perpetual 
summer of the tropics nor in the endless winter of the 
poles that the highest life blossoms. It Is where the 
alterations are the most frequent, sharp and varied, where 
day and night, summer and winter, hill and valley, sea 
and land, work and play, industry and art, alternate for 
each individual in the greatest diversity, that the highest 
civilization arises. 

Where the alternations are the most frequent there are 
the transformations most frequent and varied: from rest 
to exertion, from warfare to decorative art, from ugly 
crudity to refined beauty, from ethics to economics, from 
labor to faith, — there the swings of the pendulum beat 
forth the fullest life. Each double swing, each transfor- 
mation and its reaction, constitute one step upward 
toward life's highest goal. Only through such oscilla- 
tory escapement does the pent-up energy of potentiality 
for life find visible motion and measurement. 

Therefore has this lesson been presented in double 
form, for adoption to what extent one pleases, yet with 
equal certainty of final result; treating first of bare 
economic forces, sure to blossom into ethical fruit, if once 
planted, in Part One; of forecast of such fruit, of help- 
ful watering of the seeded soil, hastening and facilita- 
ting growth, forefending stunting or distortion by too vio- 
lent contact with resistance to expansion, in Part Two. 
Taking the two portions together, this simple little moral 
do they point and have pointed repeatedly: 

That mankind, to a degree far greater than has 
hitherto been supposed, is as good as it is permitted to be; 

That at all times some individuals are forced to be bad 
and some are permitted to be good; 



ETHICAL SYNTHESIS 595 

That the forces which coerce the bad Into their wicked- 
ness are set into motion, unconsciously, by the good; 

That, therefore, ignorance Is as much a sin as Is 
malice; 

That, therefore, most rigidly Is It true that each is his 
brother's keeper; 

That economic forces, constructive or destructive, 
always produce ethical results correspondingly good or 
bad, and that they are, Indeed, the only source of ethical 
results; that ethical results react to originate economic 
forces; and that. In finality, ethical forces are ethically 
valuable only within the individual In which they arise, — 
lending him happiness but no one else, they being non- 
transferable, non-negotiable and perishable with him: In 
short, not a social phenomenon at all, but an Individual 
one, illumining the few about him with a warmth of 
moral glow but leaving In outer cold and darkness the 
millions reached by his economic acts. The only social 
ethics are those aimed at the economic betterment of all 
other individuals, Impartially; the only social economics 
are those calculated to produce ethical good. In other 
words, that preaching to men to be good and industrious 
will not make them, as a body or to a greater fraction, 
either sinless or productive; but that by giving to them 
the chance to be Industrious, and with It the full product 
of their toil, they will become highly productive, while the 
goodness will take care of Itself. 

The welfare of the community Is the only object for 
each man's efforts which may effect results, either for the 
community or for himself. So long as he seeks his own 
ends he must Inevitably fail of attaining them. So soon 
as, and as far as, he casts in his lot with his fellow-men, 
in his week-day acts as In his Sunday professions, not to 
the subdivision of all property but the opposite, not 



596 THE COST OF COMPETITION 

abandoning that individual control of his own deeds 
which is his god-head, nor that control of the things he 
needs to do with which is his mundane right, but of the 
fruits of Ms toil, casting them all into the common fund 
and taking from It what the community's sense of justice 
says is his, placing his faith where Jesus of Nazareth 
placed It and taking no heed of what he shall eat or what 
he shall wear beyond taking all heed possible of what the 
community shall eat and wear, placing his faith In a just 
remuneration for what he does where Washington and 
Lincoln and every other patriot, down to each private in 
the ranks, has placed It since : with the people, — then and 
to that degree, and not before or more, shall each and 
every one of the people be fed and clothed and amused 
and inspired as never before In the history of man- 
kind. 

For such is the case to-day. Seven-eighths of the people 
do just this thing, patiently, ploddingly, with faith, resig- 
nation and a wonderful measure of content, doing what Is 
laid to their hands to do, taking as their natural reward 
what Is awarded to them, — and accomplishing, in all this, 
all productivity of material good which Is accomplished 
anywhere. Human nature thus proves itself to-day 
entirely capable of doing all which has just been called 
for. The only flaw In the present result lies in the fact 
that these altruistic laborers comprise only seven-eighths 
of the whole, that they accept not what the entire com- 
munity, but what the other eighth, awards to them; and 
that the other eighth, comprising the most capable In the 
land and representing seven-tenths of its Industrial 
ability, being richly hired and strenuously applauded for 
doing very differently from the altruistic masses, does take 
all heed of what It shall eat and what it shall wear as 
individuals, with no thought of the welfare of the com- 



ETHICAL SYNTHESIS 597 

munity or of any responsibility therefor. But it does so 
only because it knows no better way, and not because of 
" human nature," not because it wishes to; and when once 
shown that material as well as spiritual welfare lies in the 
opposite direction, will offer little resistance to leaving its 
wearisome, luxurious strife. 

This, then, is the lesson of unfathomable hope to be 
drawn from an analysis such as this : that to rid the world 
of sin and sorrow we need no longer rely upon exhorta- 
tive reformation of the individual character. For cen- 
turies that process has been furthered with all the zeal 
of the saints and martyrs. In so far as it has found 
expression in the christianization of our political institu- 
tions, in the foundation of our common law upon the 
principle that all men are brothers, it has borne rich fruit; 
it has been, indeed, the keynote of the progress of civiliza- 
tion. In so far as it has confined itself to its declared 
purpose, the reformation and exaltation of the individual 
spirit, its fruits are almost invisible. In proportion to our 
material prosperity, to our fair chance to be good, there 
is now more crime, more sin, more laziness, more poverty, 
more unhappiness and a greater lack of common faith 
abroad, among the individuals of the Christian nations, 
than there ever was before; at least, there is no less. If 
our modern hospitals, asylums and organized charities 
bear witness to the growing Christianity of the state on 
its one side, the • slums and the " Tenderloins " bear 
heavier witness that its growth is incommensurate with 
the growing need for it. If evangelism is raising hun- 
dreds out of crime into patient submissiveness every day, 
economic pressure is daily crowding down thousands out 
of contentment into revolt. If evangelism, if direct appeal 
to the individual's moral control of his own acts, is our 
only hope for progress, then are we hopeless; humanity 



598 THE COST OF COMPETITION 

must have already reached and passed its zenith and be 
now sinking slowly into senility and decay. 

But evangelic exhortation is not our only hope. It is 
not even any hope for more than staying the downward 
drift, for the active progress of the race ; although It may 
be for the momentary comfort of the individual, teaching 
him more patient endurance of unnecessary pain. It is 
because we have been expending our best striving for a 
higher life in that most mistaken of ways that our progress 
has been slow or backward. It is because we have sought 
too diligently for the mote of sloth or malice in our 
neighbor's heart, and too idly the beam of wllllngness-to- 
barter in our own, which has caused the trouble, which 
explains how the beam grows daily larger while the mote 
remains no whit less. It is because we have thrown to 
the winds alike the teachings of the Nazarene and of 
evolutionary science that we grope and stumble. It is 
because we have mistaken man as the sovereign of his 
environment, whereas he is its creature, that we have 
failed. It is because we are judging others, Instead of 
devoting ourselves, that comes now the judgment heavily 
back upon us. 

But the failure is full of hope; for to address one's self 
directly to the reformation of the individual is admitted, 
from an instinct born of centuries of untoward experience, 
to be a most discouraging task, fit only for those who 
know not only how to die but how to fail endlessly, to 
combat " original sin," fit foeman for a Deity. But to 
address one's self to the reformation of an environment, 
Impersonal and non-resisting except from inertia, calling 
only for industry, intelligence and some faith, for address 
to the intellect rather than to human nature, In order that 
first the institution and then the individual may be 
reformed, is a task full of hope. 



ETHICAL SYNTHESIS 599 

When the progress-loving world once really sets its 
hand to this true throttle of ethical motives: Institutional 
economic environment, and opens It, then will be, not 
the millennium perhaps, but certainly the greatest single 
step toward It which the world has ever yet seen actually 
accomplished. For not only Is there here In this country 
to-day a surer control of Institutional environment, In the 
freedom of political life of which we are so proud, than 
ever existed anywhere before, but its effects shall spread 
abroad, like a tidal wave, over a vaster concourse of 
peoples than might ever before have been reached. It 
is not only that what the .American nation once spon- 
taneously undertakes is done with greater speed and 
thoroughness, and upon enormously larger scale, than his- 
tory records elsewhere. It is that the fruits of her might 
and right can no longer stay at home. With all the mate- 
rial Instruments of bond between man and man, with the 
railroad and the steamship and the telegraph firmly within 
her grasp, with that commercial and military preeminence 
which makes them effective already hers, with a popula- 
tion already pressing hard, in its lusty growth, against 
the confines of country and of conscience, this vigorous 
young Republic possesses a greater potentiality for the 
development of world-wide material prosperity and moral 
welfare, by the proper application of her skill and energy, 
than has any other single Power upon the globe. But 
not in the odious comparison of horrid war Is this supe- 
riority to be demonstrated. It Is In her superior courage 
In demonstrating the fitness of peace. Internal as well as 
International, to survive over war; it is in her greater firm- 
ness of democratic faith, in her willingness to rest her 
national fortunes upon these synonyms, love and justice, 
as a foundation, upon the absolute equality of each man 
in his institutional relations with all other men. It Is In 



6oo THE COST OF COMPETITION 

her command of these principles of conduct of national 
life, already formulated as the basis of our constitution, 
already preached in every Independence-Day oration and 
already denied each morning by each profit-seeking citizen 
before the cock crows twice, that she is to prove her 
peaceful command of the later, really civilized world. 
In Venezuela, in Cuba, in China and in Manchuria she 
has stood and is standing courageously, consistently and 
firmly for liberty of natural growth : the one world-power 
most effective as to actual result, no matter what might 
be the outcome of supposititious war> of all the scheming 
others. Within the last six years, in spite of inevitable 
mistakes, she has made not only a new Cuba and a new 
Philippines, but a new Spain and a new Pacific. Within 
twenty-five years she has helped to make a new Japan, — 
a Japan which has challenged the admiration of the 
occidental world by the marvelous success attending its 
adoption of western science, coupled with a patriotism 
too pure to copy western commercial examples, a 
Japan which already suggests what America may be when 
its commercialism is eliminated by the abolition of barter. 
There are even now indications that she may have been 
able to preserve old China and to effect a new Russia, 
— a Russia soon to be equipped with a constitutional gov- 
ernment born of wholesome failure without and within and 
now for the first time really started toward an honorable, 
healthy prosperity.^ Situated as is the United States, 
topographically and ethnographically the center of the 
West, facing Occident and Orient on either hand, com- 
pounded In her blood from Latin, Teuton and Celtic races, 
no single flag covers anything like the infinity of possibility 
for development of national self and for peaceful, benef- 
icent influence over her Independent and dependent 

* Written in the summer of 1903. 



ETHICAL SYNTHESIS 6oi 

neighbors as does our own. No flag represents anything 
like our possible unity of purpose to accomplish this 
thing. 

The socialists dream beautifully of a unified human 
race. Their red flag of one common blood symbolizes 
the noblest ideal now offered to civilization for compre- 
hension and adoption: a world of peoples embodying in 
their political relationship the brotherhood of man. But 
the first step toward its realization is a unified America, 
a national home for true harmony and true liberty, — for 
a harmony of material as well as political interests, for a 
liberty of hand and home as well as of tongue and ballot, — 
a house of Columbia no longer divided against itself by 
Barter. 



EPILOGUE 

TO those who have labored with the author to 
the end of these many pages and have picked 
up somewhat of their spirit, it may be of interest 
to note the history of their origin. 

In 1889 the writer was living In Boston. He had 
read Edward Bellamy's "Looking Backward," and It had 
set him to thinking. Indeed, he had already been con- 
siderably stimulated to serious thought as to the social 
problem by the reading of Henry George's " Progress 
and Poverty," and now this added light upon the extent 
and depth of the evil called for prompt decision as to 
what attitude was to be assumed toward the question: 
whether it was to be considered a *' calamity-howl " or a 
tempest In a teapot, or to be regarded as as big and as 
urgent as It appeared to be. As a means to this end a 
day or two of vacation was taken, at the shore, with one's 
back on the sands and one's eye on the clouds. At the 
end of that time there was no longer any doubt: it had 
become painfully clear that the spirit of competition (for 
the fact of it was already familiar from commercial 
experience) was that of the prize-ring, or worse. Another 
fact had also become clear, and that was that the writer 
from that time on was enlisted upon a campaign for its 
extermination. 

The publication of " Looking Backward " had led to 
the formation, in Boston, of " The First Nationalist 
Club," to be followed rapidly by many others, and to the 
publication of the monthly magazine. The Nationalist. 

602 



EPILOGUE 603 

With this movement the writer naturally came into con- 
tact, and allied himself with interest. The movement did 
not last long, however. Its aim was good and Its work 
was good, but It was ahead of the time destined for per- 
manent results, or even for continuity of method. It 
broke the ground, supplied the inspiration and revealed 
the popular willingness to respond; but it failed to offer 
a concrete programme capable of Immediate furtherance. 
Its body soon fell away, but its spirit went marching on. 

One day during that winter I returned from a long, 
tiresome day of local travel to keep an appointment at six 
with Sylvester Baxter. He led me down a little blind-end 
alley leading off from Milk Street and supporting a row 
of old-time residences, then already lost in the mass of 
commercial life about them and since disappeared alto- 
gether. One of these was then the birthplace of 
Mieusset's cafe. Through Its narrow front-entry we 
went, past the host's tiny bar, up a flight of erstwhile 
domestic stairs and out Into a diminutive roof-garden 
situated over the rear extension of the house. It was not, 
however, a roof-garden in the modern sense, for every- 
thing from the vines growing overhead to the vin compris 
on the table, was what It pretended to be. Here I found 
seated a circle of enthusiasts over national cooperation, 
assembled to eat *' Dutch treat '* together, to discuss 
Industrial possibilities for the future and to consider ways 
and means for furthering them. The assembly was styled 
" The Cold-cut Club," it being forbidden In its constitu- 
tion for a committee to arrange a meeting over a hot or 
formal dinner. 

The meetings of this little group constitute one of the 
most pleasant memories of my life. They were absolutely 
informal. To wish to come was the only eligibility 
demanded for admission ; to eat, drink and make a speech, 



6o4 THE COST OF COMPETITION 

regardless of endless Interruption, the only price of free- 
dom to depart. Any man might bring a guest, subject to 
the same conditions, and many and varied were the Inter- 
esting guests we had : doctor, lawyer, poet, painter, editor 
and legislator. The only trouble with the whole thing 
was its popularity; It grew beyond wholesome bounds, 
was paralleled and copied, and died finally an honorable 
death of apoplectic prosperity. 

If I said that the center of these meetings was Edward 
Bellamy I should mislead. The center of all interest, 
enthusiasm and affection he certainly was, and never 
flagging in the zeal which finally killed him. But a more 
modest man I never knew. He came more as a guest 
than as a leader, taking no part in the organization or 
administration, always needing urging to get him on his 
feet. But the shrewdness of his digest of the progress 
of the day and the kindliness of his eye I shall never 
forget. 

Soon after that, Mr. Bellamy, aided by Mason A. 
Green and Henry R. Legate, started the publication of 
his weekly review of current news In the light of 
nationalist doctrine, called The New Nation, In the 
ofl^ice of this sheet arose many a lively discussion of tend- 
encies present and future, and It was in these that the 
writer's Ideas became better crystallized and formulated. 
Mr. Bellamy was an uncompromising altruist. " There 
can be no outcome in equilibrium from the present insta- 
bility," he would say in effect, " but the universal accept- 
ance of the Idea that all men work for all, and that, out- 
side of the home, there is to be no ^ mine ' or * thine.* 
Once grant that the people are to operate the street-rail- 
roads and they will not only reduce the fares to cost, say 
three cents, but fares will be abolished altogether, so that 
all members of the community shall pay equally for who- 



EPILOGUE 605 

ever chooses to ride. Once admit that to each belongs 
what he produces, to the inevitable abolition of all profit, 
interest, dividends and rent and to the hopeless pauper- 
izing of those who cannot produce, and the community 
will not stop there. Instead of trying to attain to any 
just distinction between individuals as to their produc- 
tivity, always a hopeless task, the whole Gordian knot 
will be cut by the community's taking from each all that 
he can produce and returning to him all that he can con- 
sume. The superior individual will enjoy life better 
because he is superior, of greater strength of body, mind 
and heart, getting his peace of mind from the knowledge 
of helpfulness to others; the poor in body or spirit will 
be punished, if punishment they ever need, by that worst 
form of all contemnation, pity. The quite recalcitrant 
few, of course, will be restrained by force, as now." 

This is the position of the consistent altruist. It is a 
higher and a broader position than my own. And yet 
I differ with it now, as I did then, to the extent of feeling 
that there is inevitably an Intermediate step, and that 
upon the advocacy of this step a consistent position may 
be founded. As to the ultimate outcome, I believe that 
Bellamy was right; but there lies before us a more con- 
crete, practicable step than the inculcation of his broad 
philosophy, and that is the plain conservation to each man 
of the value of what he produces. This Is a programme 
founded upon a principle of commercial right which Is 
already accepted as a formula. If not Insisted upon as a 
fact, by the Industrial world; and It Is within the Indus- 
trial and commercial world, not upon It, that whatever 
reform Is to be accomplished must be effected. A start 
from these premises leads one inevitably, by the path 
already marked out, to the abolition of all private owner- 
ship of tools or services and all individual manipulation 



6o6 THE COST OF COMPETITION 

of prices. That once accomplished, the premises are 
assured. What further steps this one may lead the world 
Into I know not. For the present I do not care. So 
surely as It Is true and right that to each man should be 
conserved what value he produces, so sure am I that the 
attainment of that policy will constitute a true advance 
and assure a truer happiness. What may logically follow 
then Is not to be feared. 

There Is another and minor personal object In view in 
this work than the general political one just outlined. It 
Is the rebuke of that school of political doctrine which 
supports class-privilege and legalized selfishness upon a 
demonstration of its necessity from a " scientific " basis, 
which claims that the worst which we now know of man- 
kind is natural to the extent of Irremedlabillty. Natural 
in one sense it surely is, to the extent of being the inevi- 
table effect of a concrete cause ; but irremediable it is not, 
any more than the natural difficulties of navigation or 
agriculture are Irremediable. I preach, instead, that true 
science and true religion are one; that it is not only the 
undevout astronomer, but the unphilanthropic, who is 
mad. He who cannot read from his vernier a faith in 
and a hope for all things made by God, and chief of all 
for man, has not read it accurately. I proclaim the faith 
that he who starts out, consistently and earnestly, from 
careful observation, with the Inductive methods of the 
Baconian philosophy, must Inevitably end up with the 
moral principles of the four gospels as his scientific con- 
clusions. It Is to thus rebuke with all the earnestness at 
my command the intellectual superficiality, as well as the 
cruelty, of the so-called laissez-faire school of political 
doctrine which was one of the minor objects In undertak- 
ing this work. The evidence of the falsity of this school 
has long been palpably available to any man who would 



EPILOGUE 607 

seriously undertake sociological study with that proper 
sense of responsibility to the community and of faith in 
man which must exclude trifling and ensure success. The 
reckless superficiality of its work and the bigotry of its 
attitude, in the face of all this evidence, now stand as the 
complete explanation of why the people have remained 
untaught by scientific theory, of why they have not yet 
heeded the lessons of their bitter experience, of why it is 
still being left to the painful force of Iniquitous circum- 
stance to set the popular foot upon the path of reform, 
when It might imaginably have been initiated by peace- 
ful and rational, but more forceful, discussion. If we 
should ever find that we had followed France and Russia 
In inviting violent revolution — as might already appear 
to be the case, from Homestead, Chicago and Colorado, — 
by the stupidity of our conservatism, it is this par- 
ticular school of public writers which we shall then have 
to thank, almost exclusively, for our affliction. 



INDEX 



INDEX 



Abolition of barter 




• 


• • 


PAGE 
529 


Economic gain from the 




. • 


. 549, 


560 


Accountance defined . 




■ 


2t 


>, 57 


Activities, not avocations, the guide 




• 


59, 87, 


166 


not conscience, the guide 




• 


216, 227, 


241 


Advertising. Futility of 




, 


172, 


248 


Cost of ... . 




• 


. 


247 


Aesthetics .... 




, 


, ^ 


487 


Architecture .... 




, 


^ ^ 


490 


Art. The term defined for the present 


arg 


ument 


• • 


401 


discussed .... 




, 


• • 


487 


Barter. Chapter on . 




* 


• • 


69 


Preliminary definition of 




• 


• • 


69 


Further definition of 




• 


73 


, 95 


illustrated 




• 


• • 


76 


displayed in tabular form 




• 


» • 


143 


a negative of productivity 




• 


• • 


80 


a parasite .... 




• 


• • 


81 


Internal, or horizontal competition 


• 


, . 


84 


Evolution of, in America 


, 


241, 


254, 257, 


274 


Ethical nature of 


^ 


^ 


^ ^ 


359 


The abolition of . . 


^ 


, 


^ ^ 


529 


Economic gain from the abolition 


of 


. 


• 549, 


560 


Effect upon the Individual of the abolition of 




567 


Barter-cost defined 






^ ^ 


156 


measured .... 






• • 


220 


Capital. Preliminary definition 






• • 


18 


and raw material 






, , 


19 


contrasted with capitalism 






. 113, 


516 


Capitalism, defined 








114 


The passivity of . . . 






. 


207 



Census. U. S. as a basis for the study of the evolution 
of barter . . . . . . . . 

611 



241 



6l2 



INDEX 



123, 207, 212, 



Central Office^ defined .... 

applied to the country as a whole . 
Circulation within the economic organism 
Civic decoration ..... 

Classification, by activities instead of by individuals 

Density of population within the same 

by Avocations ..... 
Competition, Chapter on ... . 

first defined . . . . 

first identified with barter and contrasted with emu- 
lation . . . . . 87, 91, 94, 

contrasted with emulation by parallel column 

Vertical ...... 

Vertical and horizontal 

Evolutionary tendencies in 

an economic aristocrat . 

and corruption especially American . 
Concentration of competitive effort 
Congestion ..... 

a result of traffic-facilities, not of a lack of them 

The ethical effects of . 
Conservation of economic energy 
Consolidation in manufacturing establishments 
Consumption (economic) defined . 

Chapter on Production and 

Demand and ..... 

Production and, in balance 
Consumption (tuberculosis) 
Cooperation, The economic gain from 
Coordination. Chapter on Specialization and 
Corruption, defined for the present argument 

The causes of .... . 

and competition, especially American 
Crime, The causes of 

The growth of . 

defined for the present argument 

The ethics of .... . 

Cycle, The biological, of production and consumption 

The economic-biological 

Efficiency of the economic 

The daily, of life, 



PAGE 

. 56 

. 531 

. 197 

. 490 

59 

217, 221 

. 242 



98 
90 

144 

99 
202 

273 
207 

253 

431 

, 166 

, 285 

, 297 

494 

150 

273 

29, 33 

16 

169 

282 

314 

549 

35 

401 

298, 428-451 

. 431 
298, 426 

. 301 
. 401 

. 403 
. 16 

. 159 
160 

. 415, 



188, 
40, 



i8 



144, 



INDEX 

Decreasing Returns, The law of 

Mathematical statement of 
Degeneration. Artificial 
Demand. The curve of 

and consumption 

Chapter on Supply and 
Depreciation, defined 

further explained 
Design, defined as one department of productive labor 
Diminishing Returns, The law of , » , 

Mathematical statement of . 
Dissipation. Economic .... 140, 

displayed in contrast with Production 

Biological and economic, contrasted 

Growth of economic, chapter on . . . 

Growth of industrial inefficiency due to economic 

The abolition of economic 
Distribution, defined 

of purchasing-power 

The fundamental law of. 

The second law of 

The rigidity of the laws of 

within Division II. 

The actual proportions of 
Divisions, The two economic, of Society, displayed 
Earning-efficiency , defined 

illustrated 
Economic Organism. The 

Circulation within the 
Education, defined for the present argument 

Present policies in 
Efficiency of the industrial body 
Element of economic society. The 
Emulation. Chapter on and first definition 

contrasted with competition . . 87, 91, 94, 

ditto by parallel column 

Ethical contrast of, with competition 
Energy. The conservation of economic 

The two dimensions of economic 
Enforced Idleness . . . . .185, 188, 

Equilibrium Stable, of market ..... 



613 

PAGE 
36 

45 

193 

323 

169 

316 

20 

117 

26 

36 

45 

154 

143 

161 

231 

262 

529 
148 

153 
168 
178 
191 
209 

215 
142 
32 
221 
195, 200 
197 
401 

451 
165, 262 

317 

89 

144 

99 
359 
150 

319 
270 
332 



6i4 



INDEX 



241, 254, 



Evolution of barter in America 

of purchasing-power . . . 

of technical productivity and human enjoyment 

of mankind .... 

Exchange, defined .... 

Pure, and exchange alloyed with barter 
Fees, classified as wages 
Fiction. The mold of modern 
Free will. The doctrine of 
Genius. The repression of . 
Growth. The source of community 

Natural, vs. artificial degeneration . 
Hangings. Increase in number of 
Homicides " " " " . . 

Horizontal competition, defined 

within the several layers of society compared 
Idleness. Enforced . . . . .185, 

Income and purchasing-power .... 
Increasing Retuj'ns. The law of . 
Individual. Effects of barter upon the welfare of the 

Injustice to the ...... 

Effect of the abolition of barter upon the . 
Inefficiency of the industrial body .... 
Insanity. The increase of . 

Interest, defined and discussed . . 1 14-125, 

Invention defined as one form of productive labor 

The place of, in economic coordination 127, 128, 

The growth of science and, contrasted with the prog 
of individual welfare . 76, 168, 221, 

Journalism. The mold of modern 
Land. Definition of the economic term 

The struggle over the . 
Landlordism. The term defined 

discussed ..... 
Laws. The natural law of diminishing returns 

The natural law of increasing returns 

The first and second laws of distribution 

The rigidity of the law of distribution 

The classification of civil law as a sort of barter 

14.S, 14.6, 



PAGE 

257, 273 

. 260 

. 257 

. 577 

. 54 

62 

32 

. 479 

• 407 
190, 378 

. 161 

. 181 

. 308 

. 308 

123, 207 

209,214 

188, 270 

158 

44 
221 
267 
567 
262 
298 
155, 516 
. 26 

136, 137 
ress 
232, 257 

. 479 
i7» 132 

. 286 

135, 139 
. 286 

36, 45 

44 

168, 178 

. 191 

243, 244 



INDEX 

Libraries. The public 
Life. The object of . 

The value of . . . 

The elasticity of, under pressure 
Literature. The mold of modern 
Lynchings. The increase in the number of 
Malthus. The doctrine of 
Market. The present unnatural distortion of the 
Market-equilibrium 
Market-price 

Money . . . . 

Money-scale. The, defined . 

The proportions of the 
Murder. The growth of the prevalence of 

The causes of the prevalence of 
Natural price. The . 

wage. The 

The, price and wage contrasted 
Organism. The economic 
Overproduction . . . 

Pauperism. The cause of , 

The growth of . 
Price contrasted with Value 

defined , . . 

The natural 

-tendency under barter 
Production. Elementary analysis of 

defined, analyzed and displayed in tabular 

further defined 

The continuity of, and consumption 

The balance of, and consumption 

and economic dissipation, displayed 
Productivity defined 

The fate of the, of the individual 
Profit. Gross, defined 

Net, defined 
Prostitution. The causes of 

The prevalence of 
Public and private operation of industry 

The comparative cost of 



615 

PAGE 

474 
4 
8 

418 

465, 479 

308 

38 

173 

331 

73 

148 

152 

216 

308 

426 

74> 530 

532 

533 

195, 197, 201 

151, 170, 175 

. 222 

. 298 

12 

73, 151 

74, 530 

79 

23 

form 27-29 

. 67 

33 

. 282 

144, 255, 257 

. 32, 73, 95 

. 222 

. 155 

. 156 

298, 420 

. 422 

. 533 



6i6 



INDEX 



Purchaser. Distinction of the, from the consumer 
Purchasing-power 

The social distribution of 

Income and 

Controlling importance of 

Less than productivity 
Race-track analogy. The 
Raw material, defined 
Rent. The term defined 

Natural 

Commercial 
Returns. The laws of decreasing and increasing 
Salary classified as a sort of wages 
School. The public 

The " laissez-faire," of economics 
Science. The growth of, and invention powerless to 

individual welfare . . 76, 168, 221, 

Society. All levels of, affected by barter 

in analogy to the race-track pool 
Specialization. The gain from 

and coordination 

upon barter 

upon vertical competition 
Stage. The modern 
Starvation-wage. The 
Statistics. The futility of 
Submerged Tenth. The 
Success. The double nature of commercial 
Suicide. The cause of the prevalence of 

The growth of the prevalence of, in America 

The growth of the prevalence of, in England 
Superintendence, defined 
Supply and demand 

The curve of 

The law of, and demand 

The distortion of this law 

and demand freed from the brake 

The natural operation of, and demand 532, 549, 
Theatre. The modern 
Tools. The term defined 





PAGE 




33 
. 168 




153 

158 


172 

169, 222 


. 


231 


I 


8, 20 


132, 154 
134, 138 
136, 139 

36, 44 


• 


32 


. 452 
39, 606 
aid 


233, 257 
. 189 


23 


I, 237 




40 




. 35 




III 




280 




479 
184 
186 




185 

87 

298 




312 




315 




25 
316 




329 




333 


33 

55 


335 
8, 558 

8, 571 


• 


479 
18 



INDEX 



617 



PAGE 



Transformation J defined as one < 


department 


of 


produc- 




tion .... 


. 


23, 


28, 


67, 


142 


Transportation, defined as one department of 


prod 


ac- 




tion .... 


. 


23, 


28, 


67, 


142 


Tuberculosis .... 


. 




, 


188, 


314 


Under-pur chasing-power 


. 






. 


175, 


185 


Unemployment, a function of the 


volume 


of' 


barter 


, 


185 


The dilution of . 


, 






, 


• 


188 


Enforced .... 


• 






. 


, 


270 


Valuation defined, in contrast with 


Value 






10, 


13, 


149 


Value, defined 


• 






3, 


.^^' 


17 


and price .... 


• 






. 


. 


12 


and Valuation 


• 






, 


, 


149 


Vertical Competition, defined 


• 






123, 


202, 


207 


The reaction to, from below . 


• 






, 


, 


206 


Specialization upon 


» • 






• 


, 


280 


Wage. The starvation 


• 






• 


, 


184 


The natural 


• 






• 


^ 


532 


Wages. The term defined . 


• 






• 


32, 


154 


The law of . . . 


• 






• 


, 


180 


Wage-system. The competitive 


• 






• 


. 


181 


Wealth, defined 


• 






• 


, 


22 


Will. The doctrine of free . 


^ 






• 


, 


407 


The human, a form of potentia 


d energy 






• 


. 


413 



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DOLETOWN, PA, 

MAR. 84 

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